Anthony Hall
If uncertainty is a deal breaker in the hearts and minds of investors, there is no question that stock markets are in a bunch of trouble.
Put another way, from a global perspective, this is precisely that scene in the movie where the coach or the head of the spy ring or the director of a play tosses a sheaf of papers over his shoulder, throws up his hands and says, "OK, from now on, forget the rule book." For a while, at least, investors are going to have to make up the plays as they go along.
A review of headlines is easy: The Middle East is struggling to re-define itself; Japan is struggling to rebuild after a devastating earthquake that may cost, by some estimates $250 billion and set their gross domestic product back by around 3.3 percent; in Europe, investors are wary of government debt that threatens the euro and the outcome of the biggest test to the region's unity to date -- Spain -- is still an unknown.
As predicted in this column, inflation has become the pivotal concern for the year and that leads to a quick look at China, where inflation is higher than the government wants it to be. The United Nations and the World Bank have warned recently that escalating food prices are driving millions back into poverty. In Queens, New York, an audience grumbled recently when New York Federal Reserve President William Dudley, during a speaking engagement, suggested core inflation was too low. "When was the last time, sir, you went grocery shopping?" someone in the audience asked during a question-and-answer period. (Core inflation excludes food and energy prices, but that didn't stop the audience from grumbling, anyway.)
Behind the rising food prices, oil spiked to $105 per barrel in New York this week, compliments of chaos in Libya. In London, the Bank of England is under serious pressure to raise lending rates to slow price escalation, and this follows negative economic growth in the fourth quarter. Slowing down a contracting economy, say again, what?
OK, a quick review: "Forget the rule book." It's every investor for him- or herself for a while.
In international markets Wednesday, the Nikkei 225 index in Japan fell 1.65 percent while the Shanghai composite index in China rose 1 percent. The Hang Seng index in Hong Kong dropped 0.14 percent while the Sensex in India rose 1.21 percent.
The S&P/ASX 200 in Australia rose 0.19 percent.
In midday trading in Europe, the FTSE 100 in Britain was flat, falling 0.02 percent while the DAX 30 in Germany slipped 0.33 percent. The CAC 40 in France was off 0.02 percent while the Stoxx Europe 600 was down 0.06 percent.
