From Mayhem to Moderation

What else could go wrong?

An ecological disaster in the Gulf Coast; threats of sovereign default in Europe; trouble in the Middle East; a political crisis in Japan; and a broad-based slowdown in the nascent worldwide economic recovery. Will we ever see any good news?

Actually, there’s a lot of good news. We just don’t notice. The US economy is accelerating in the second quarter. Wages are up, payrolls are up, hours worked are up, and manufacturing and temporary employment are still growing. Individuals are repairing their finances and corporate profitability, the best leading indicator of employment, has been particularly strong.

For another thing, the weak Euro is likely to stabilize Europe. When a currency falls, exporters gain. Germany’s export machine is benefiting from Greece and Spain’s budget troubles. That gives the Germans at least some reason to support the weaker countries in the monetary union. The weak Euro has also eased, for now, the pressure on China to appreciate its currency.

There are a whole host of reasons why last week’s volatility is likely to moderate in the coming months. Market corrections are always necessary and healthy until you’re in one. But it’s not different this time. Just as excessively stable markets sow the seeds for their own future volatility, excessively volatile markets create conditions where patient investors can prosper.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-05T19:22:28+00:00 June 6th, 2010|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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