What’s new at C.F.G. Heward Investment Management Ltd.
(April 2009)
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The rout set off by the sub-prime mortgage collapse continues to play havoc with capital markets. It has landed such a devastating blow to economic activity to the point where the World Bank is now forecasting that the global economy will likely shrink for the first time since World War II. Spare capacity is building at an alarming pace as manufacturing and construction activity have slowed in most major economies while consumer spending has fallen off a cliff. Trade is now forecasted to decline by the most in 80 years, with developing nations bearing the brunt of this contraction. Under these conditions there are natural instincts for political leaders to focus on what appears to be best for their country. Job losses and the number of unemployed have become a primary concern. Recessions spawn protectionism, and the deeper the slump the stronger those tendencies become.
Despite all the despair and market volatility that we have seen through the first quarter, there are a number of positives beginning to appear and there may even be a twinkle of light at the end of the tunnel. Intense attention from the G20 has resulted in a variety of stimulus packages and quantitative easing strategies being put into place. A lot of it may be politically motivated and some quite wasteful, but in the end the preponderance will find its way down to Main Street. Some leading economic indicators have turned more positive, credit spreads have narrowed and the U.S. Treasury has been successful in raising needed funds. The stimulus measures being enacted by president Obama are having positive psychological effects, which is a key requirement to repairing confidence. Some bank nationalization has been done successfully, the problem of toxic assets is being addressed and the all important housing market is showing signs of bottoming.
For our Quarterly Commentary and Performance update, please refer to the Reports & Articles section of the website
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