Is George Bush better for global business?

The global markets slowed up this past week, and although most made modest advances, the pace seems to be waning and the trading ranges were tighter as international news focuses on  the US Presidential Election, the degrading security in Iraq (as the country transitions to democracy in January) and Bush’s speech to the UN on Tuesday. In general, economic statistics continue to support growing improving economies for the leading nations, but many investors, including Trinidad and Tobago, seem to be focused on the global geo-political issues.

We do note that stats such as the US new housing stats continue to grow (up 0.6 percent from August) and that oil is trending back up to near one month highs. Earnings continue to improve as supported by the major index yields and p/e ratios. The US DOW was only the index we track which was down for the week, but the p/e ratio is at its best figure for many years, below 18 for the third straight week and reaching its lowest figure for many years 17.75. The DOW dividend yield is also high at 2.04 percent. Both indicate good value in the equity markets.

On the money front, the US Federal Reserve Open Market Committee is meeting next Tuesday  and is expected to raise interest rates a further 25 basis points, bringing the overnight short-term rate up to 1.75 percent. And as is usual the markets have already built in the increase. But investors and analysts are looking toward the comments from the Fed. Particularly, the US Fed’s current view on consumer confidence and job market will be two key indicators as to the strength of the US economy. Consumer confidence figures are due out on Sept 28 and the US GDP final figure for the quarter is due out on Sept 29. The CBS drama involving Dan Rather, if nothing else, reminds us of the natural bias in media and the requirement on all of us to corroborate facts to determine accurate information.

Looking Ahead:
Who has  stake in
global security ?

Given the dominance of geo-political focus in the news this week, looking ahead we should consider how these new geo-political events will shape our investment opportunities. We see a greater demand on the world’s population to unite to solve the common goals of freedom, security and opportunities toward a better life. We all need and want that regardless of culture, country or religion. The recent events in Russia, should have reminded all of us that we each have a stake in global security. The majority of non-Americans in the world believe that President Bush “lied” about weapons of mass destruction in Iraq. President Bush may have been wrong, but to lie, you have to know the truth and misstate it and no one except Saddam new the truth. Clearly the documented history leading up to the Iraq war shows that Saddam had WMDs, and he refused to allow the UN to verify that he no longer had them.

The bigger question, in fact the real question is why did the UN fail? Will the UN be able to recover its lost credibility or is it destined to follow in the footsteps of its predecessor, the League of Nations. Having read the 9/11 Commission report, I would recommend it to gain a better understanding of the true threat facing the civilised world. That said, no one does more to help the world than the United States. Absolutely and definitely the world leader, the US contributes more in supporting those less fortunate than themselves and leads the world in fair play and the rule of law. But it is a common believe that the United States only gets involved where there is a benefit for them to do so.

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