Market recovery will come, regardless Fed and war policies

Stock markets around the world have taken a collective hit in response to the latest beating of war drums, as the U.S. ramped up its preparations for a full scale attack on Syria. Another major factor affecting the American market in particular, whose index has slumped 4 percent below last year’s highs, is backing off by the Fed from their recent purchasing of assets.

The gloomy news hasn’t deterred Tony Harris Senior Vice President of Equity Trading at Softbank CIBC International. His investments, he says, are safe in the long-term and this sentiment may be confirmed as stocks jumped again in response to latest news the U.S. could be having second thoughts on Syrian action.

“What we see currently is further economic development. There’s a lot of naysaying going around but the fact is we are at record highs in the stock markets and we don’t expect the economy to fail to return……for the first time ever!”

Harris is not fazed that stocks may take a dip as the Federal Reserve reigns in its asset purchase policy having spent billions on a monthly basis propping up the economy. “Previous experience has shown that as the Fed winds down its monetary injections the market will bounce back, as we saw in the late nineties.”

He shared a similar positive outlook towards Syria, “The global markets are traditionally thought to suffer with rumours of war. The same could be said of China’s economic health…but the fact is we are looking at a booming market.”

“My best advice,” he continued, “is to stay relatively neutral when it comes to attention grabbing headlines. Continue looking for investments involving companies who are going into agreements, coming up with innovations, or who are trading cheap on the markets.”

The Senior VP at Softbank is convinced the Dow is moving towards 20,000 within the next two years, and the safest bets are still on the classic long-term high yield stocks.

“Trading cheap at the moment are old favourites like Microsoft and Exxon, they will continue to grow alongside the market. Also Apple.”

Bank of England warns of chaos if Greeks leave euro

Amid rumours that gigantic sums of cash are being smuggled out of Greece, the on looking governor of the BOE, Sir Mervyn King, said the euro zone could enter a “period of intense economic chaos” if the Greeks decide to separate themselves from the single currency.

Britain’s economy, itself in dire straits, could be severely affected by the Greek fallout as one estimate put a Greek exit and the resulting cost to the E.U. at a stunning one trillion dollars.

The British PM David Cameron commented on a situation where Europe needed to “make up or break up” adding that swift and decisive policy making by the euro zones economic ministers was needed.

If, as expected, Greece makes a disorderly exit from the euro it is predicted by some financial experts it will be the biggest financial crisis since the total evaporation of Lehman Brothers four years ago, and could result in up to a 5 percent fall in output equalling a cool one trillion dollars.

“It’s utterly unthinkable,” said Tony Harris, Senior Vice President of Equity Trading at Softbank CIBC International, “We could be looking at a decade or more of stagnation in Europe. The zone could probably handle a planned split with the single currency, losses of say 300 billion dollars, but if the current chaotic conditions are perpetuated it will be a disastrous outcome.”

With prospects of a coalition government off the table this month, capital has been shifting out of the country at an alarming rate amid fears the negative developments could result in panic and public disorder. In a single day, the central bank reported, over 900 million euro was cleared out.

The mood hit the markets this week as European shares and the single currency both took a slide in response to press releases revealing the E.U. would halt its financial aid to Greece.

China set to reach number 1 spot in world economies

Japan says it is “happy for all of Asia” that China is on course to replace the U.S. as the globes top economy.

Even with encouraging growth of nearly 4 percent last year, Japan has finally relinquished their forty year hold on the title of second largest world economy, as China stormed past them on their relentless march toward the U.S. and the top of the pack.

Japans government welcomed the news saying it was a boost for the region and that the figures raised hope for some major recovery in their export trade.

Indeed China, the world’s biggest population, is a huge market for Japan and news of their booming economy could well be more important than a higher place on the economic pecking order.

“It’s definitely not about a meaningless economic ranking,” said Kaoru Yosano, Japans economics minister, “We welcome the prosperity of our important neighbours. Any figures which hint at development for own population, and those in the region, is good news as far as we are concerned. We are happy for all of Asia”

All this is a far cry from the situation in the 80’s when Japans ever increasing economy brought some admiration but mostly fear from their neighbours. Japan hit rocky waters though, as the property boom subsided and the country settled into a period of muted growth in their worst decade, the 90’s.

Meanwhile the transformation that has taken place in China is startling to say the least. From understated, poverty ridden, communist state to global economic kingpin which is now targeting the U.S. to become the world’s number 1, which may happen as soon as the coming decade.

China also hopes to improve its GDP per head. With rising incomes and the tourism sector expanding at an exponential rate the signs are positive.

“When you look at the sheer scale of Chinas economy, it looks set to totally eclipse any other nation very soon,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International, “the country still has a way to go when it comes to raising the standard of living across the population spectrum however,” he added.