The markets were picking up on Friday afternoon, until the story of the aircraft carrier Eisenhower in the Mediteranean pointed up the unresolved tensions. Peace is of course the only thing that will sustain Recovery at this juncture.
JP Morgan Chase CEO Jamie Dimon was pontificating about the strength of the U.S. economy, suggesting the three rounds of quantitative easing totalled a mere $3 trillion, and the underlying assets of the U.S. are at $80 trillion. Sound point, but this was being ridiculed on Russian TV as being "pompous".
The high Oil price has caused problems for many airlines, with recently Kingfisher Airways having to cancel many flights because the pilots, who had not been paid wages for 6 months, did not turn up for work. One pilot's wife, under financial pressure, committed suicide in South Delhi. The ramifications of a high Oil price are likely to turn into demand destruction, the first signs of which are beginning to form. A casual observation during the daytime sometimes shows lots of newish cars standing outside peoples houses as they walk or take the bus to work, petrol has become so expensive. More and more I see mothers walking their children to school while peoples carriers are stood outside in the driveway.
The markets seem to be at decision levels. Last week's profit-taking may continue, or new money may hit the markets to lift them up.
I can only pray for a diplomatic resolution in the Middle East. If the Eisenhower moves a little distance away, it may help cool the unnecessary tensions, and hopefully bring down the Oil price. That is essential at this juncture for the Recovery to continue. Twenty percent of the world's oil moves through the Straits of Hormuz, bound for India and China and Japan and Africa, all these places are drivers of growth currently. A reassuring posture here will restore calm to the markets.