Financial markets
showed some calming tendencies overnight, but aftershocks remain
likely.

Fears of interest
rate rises are greater than earlier thought as market participants struggle to
decipher Ben Bernanke’s real state of mind. Tentative answer: “He is a hawk,
seriously worried lest inflation rear its ugly head on his
watch”.

China’s moves to slow
its booming economy have also contributed to the general
volatility.

Continuing tension
regarding the intentions of the major economy nations toward Iran, world’s
second largest oil producer and world’s second largest natural gas producer, is
also worrying. So too are North Korea’s plans to test-fire a
missile.

Bird flu is
currently off the front pages of global newspapers, but medical experts remain
seriously concerned at the chances of a global
pandemic.

For all this, the
outlook for global growth remains strongly positive, and timely monetary policy
tightening will help contain inflation and therefore allow strong global growth
to continue. Market participants will remain skittish, so tread cautiously,
gentle readers.

We notice ANZ Bank
is buying stakes in Chinese banks. This comes several years after selling the wonderful Grindlays franchise,
essentially, one seems to recall, because the ANZ had no-one (except CEO John
McFarlane) who understood the many Asian cultures. One assumes they now have
the relevant cultural expertise.

This week’s ABC
News/Washington Post Consumer Comfort Index shows a significant increase,
reaching -12 on its scale of +100 to -100, up from the 2006 low of -19 a month
ago. According to the ABC News/Washington Post, this week’s increase is due to
moderating US petrol (gas!) prices, which have eased to $2.87 a gallon from a
spike of $2.95 a month ago.

Despite the easing
in petrol prices, the majority of Americans maintain their pessimism towards
their economy; with 51% of Americans saying the economy is getting worse
and only 16% saying it’s improving.

More reading at
Henry Thornton