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Thursday, January 15, 2009

BetOnMarkets Afternoon Report

It’s unfortunately a case of more of the same today as markets continue to reverse the rally from the lows from November. US jobless claims and banking problems once again dominate the headlines. Economists talk about the prospects of a V, U or L shaped recovery for the worlds various economies, reflecting the expected speed of any return to growth. The prospect of the US or UK following a Japanese style ‘lost’ decade or L shaped recovery would have been laughed at just a couple of years ago, but the world is a very different place today. Economists have made various predictions that the recovery will begin in the fourth quarter 2009/ first quarter 2010 etc, but perhaps what is scaring people the most is the growing realisation that nobody knows what is going to happen. Arguably, the banks still haven’t confessed all their sub prime sins and until they do, rumours will continues spread concerning capital requirements. As they are at the epicentre of the crisis, this uncertainty could continue to shake markets for a good part of 2009. The global recovery may turn out to be worse than most people expect, it may turn out to be better, but nothing makes an investor reach for the sell button more than the unknown.