Equity markets firm in January

Equity markets are notoriously fickle but seem to have put the "end of the world is nigh" scenario, that was constant in large parts of 2011, behind them.

Has the Eurozone crisis gone away? No! Has the US debt pile been reduced or is there a credible plan to do so yet? No! but markets seem to be focussing on good news and the fact that equity prices are cheap and maybe it is time to step in and buy, with the downside not as forbidding as it was last year.

The Footsie is on a 5 month high and comparatively stable, if you stay away from the financial sector, though still highly vulnerable to the European crisis. Inflation is going the right way and the increase in the unemployment rate is not going to cause any surprises and is the last economic statistic to turn positive in any crisis.

There is still a feeling that Greece might default as it has financial obligations due in March, it can't meet without the assistance of bailout funds but Euro leaders have had a lot of time to consider their next course of action should Greece leave the Eurozone and this is no longer seen as a catalyst for a break up.

If Italy or Spain defaulted however, that would be a much different story.