As a new week begins on Wall Street, nobody wants bank stocks, J.P. Morgan Chase hints at changes at the top, OPEC ministers tussle over crude, and airlines are in for some financial turbulence. In fact, the only good news is for France, which apparently won't lose the IMF over the DSK scandal.
In its latest report, the IMF applauds national policymakers for stabilizing credit markets and putting the global economy on a recovery track. However, thorny problems remain -- including how to prevent overheating in emerging markets, and how to cut the U.S. deficit while lowering its unemployment rate.
The Federal Reserve is doling out billions to buy bonds in hopes of keeping interest rates low and stimulating the economy. However, several powerful forces are working against that low-rate strategy, ranging from investor psychology to global competition for capital.
Fitch Ratings has downgraded Ireland three notches from A to BBB , citing the costs of restructuring the Irish banking system, the country's weak growth prospects, and uncertainty about its economy due to the deepening financial crisis, despite the international economic assistance it received last month.
Simply put, the losses Irish taxpayers will be forced to cover are larger than the nation's economy can support, even with the promised bailout. The EU and Irish political leadership's attempts to put a brave face on the crisis is no match for this crippling burden.
Given all that transpired globally over the Thanksgiving weekend, the idea of holding risky assets like stocks should give investors heartburn. Perhaps a strong Black Friday weekend and holiday selling season will draw traders' gazes, but that's no sure shot.
Investors should stay focused on the dynamics within European politics that shaped the rescue. Other indebted economies -- like Spain, Portugal and Italy -- could find themselves in a similar situation, after all. And politics will again guide market moves.
As if the Irish debt crisis weren't enough, investors are worried once again about rising inflation in China. But officials in Beijing are quietly building an impressive record of economic management, and some analysts are convinced they can meet the challenge.
Investors take note: Despite the calls for order, national policymakers are dealing with an increasingly haphazard scenario loaded with counterproductive results and unintended consequences. The result could be a slide toward protectionism.
Forget the gloomy predictions: According to Richard Berner of Morgan Stanley, U.S. consumers are a year ahead of schedule in repairing their household balance sheets, giving them the ability to start spending again soon. And the head of the IMF was explicit Monday: A double dip is unlikely.