As time passes from the summer when the market realised that the US sub-prime lending problems might...
As time passes from the summer when the market realised that the US sub-prime lending problems might bubble up into the economy and the wobbles began, investors have begun to assess how deep the problems run and how to navigate the coming months without stumbling into the next sub-prime bear trap.
The Fed has attempted to assist the market by injecting liquidity and reducing lending rates, but we should expect the credit problems to continue rising to the surface for some months to come. Alongside the corporate worries - in other words who has exposure to what - the impact on US consumers will be crucial.
Against this background global economic growth is strong and the dollar weak. But there are companies performing very well in this environment if you are able to identify the winning themes. One example is in oil services. The high oil price will inevitably translate into more oil and gas drilling activity. The US is a world leader in oil and gas technologies and energy services and this theme is playing well in the current environment.
Other winners are companies that are less sensitive to housing and US consumer confidence and that benefit from a weak dollar. Among those companies are the US's large-cap global leaders - especially those that benefit from continuing global economic and infrastructure growth. America's global technology companies are unique in the world. While not immune from sentiment-led volatility they are well placed now by exporting products and services to all corners of the growing world.
Consumer confidence is very important to the US economy and could be weakening - pressure on employment growth, inflation and wages are contributing to this. Rising commodity and oil prices mean we are seeing higher food prices in stores and record gas prices at the pumps. But even this can be a positive theme; strong growth in the agricultural sector is a multi-year trend and agricultural commodity price inflation has led to some companies in this sector performing well throughout this period.
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