Investors lately have had a hard time of it trying to find somewhere, not so much to make money but to preserve the capital value of the funds they have. Not easy when you have some bank shares earlier this week dropping by up to 12% in one day.
This could be yours and mine pension pot remember, not just some smart Hedge Fund with speed of light computers taking advantage of microsecond gaps in the market.
There have been very few safe havens available during the current financial turmoil but gold has been one of them, hitting a record of US 1,920 but seeing profit taking substantially at these levels.
In the currency markets, the Swiss Franc has been the gold equivalent for some time as there has been no natural home for the nomadic funds looking for a profit and or just capital survival, trying to stay out of the Euro and the US, due to the debt crisis and US downgrade. In an effort to stabilise the high value of the Swiss Franc, causing havoc in their Export markets, Switzerland has just pegged the value of the Swissy to the Euro.
For now we may be in the eye of the hurricaine as far as equity markets go, with the Asian markets able to find sufficient positive economic data to support a small rally that should spill over to European markets and possibly the US later in the day.
The current considerations are these:
- US fiscal package to be announced by Obama later this week, though it may well have a large political agenda built in, his stock waning ahead of the elections. Best guess on amount is US 300 billion but coming from where?
- Are things that bad that markets can expect another round of high level fiscal assistance by the US government at the very least, known as QE3 and are we in a double dip recession?
- Eurozone countries currently under focus are Greece and Italy, the latter country struggling to vote through an austerity package, the former struggling to keep to one.
- Banks are being hit left right and centre, having to increase capital ratios, being taxed on transactions, now fighting legal actions by the US Government and potentially holding billions of Euros of risky debt backed by Italy and Greece. One bank failing now would bring the whole pack of cards down very quickly and have global implications, unless the crisis within a crisis was dealt with very quickly.