The Syrian Arab Republic is a longtime pal of Iran that was once castigated by George W. Bush as part of the Axis of Evil. But like John le Carré's legendary spy, it may be ready to come in from the cold. This would be no minor event for peace and prosperity, and it if happens, the prime mover will be Syria's young president, Bashar al-Assad. The road to peace in the Middle East runs straight through Damascus. As Henry Kissinger once said, you can't make war without Egypt or peace without Syria, and his statement is just as true today as it was then.
Economies and equity markets around the world have bounced back from the depths of the abyss of the Great Financial Crisis of 2008. But many wise, battle-tested, and highly respected gurus remain bearish about the extent and staying power of the recovery, the medium-term outlook for the big Western economies, and future returns from stocks. Phrases like "dead-cat bounce," "house of cards," and both "stagflation" and "depression" crop up in their pronouncements. They point to a tapped-out consumer who has pigged out on debt, a minuscule savings rate, a financial system that remains egregiously overleveraged, and governments and central banks that have shot their wad.
The recent drop in the Shanghai market has gotten everyone scared. Sharp downward movements tend to focus the mind, just as a good hanging in the Old West used to do. Suddenly the conventional wisdom is that the powerful rally in stock markets around the world is unjustified and has gone too far, too fast. Stocks are no longer cheap, the bears say, and the global financial system remains on its sickbed. Most economists and investors believe that while the world economy may rebound in the next few months, it's a bounce engineered by stimulus programs like Cash for Clunkers, and, as the steroids wear off, there will be another dip in 2010.
some saying it perfectly captures the mood of the folks in the know about the markets. Sure enough, smart bulls like Barton Biggs do think people should be in the market now . But before you go stocking up on investment DVDs, just remember: smart
It's intriguing that as Asia leads the recovery of the world economy and as its stock markets power to new highs, Japan, the biggest economy and market in Asia, languishes. If ever there was an equity market that qualified for the legendary "Four U's" (underowned, undervalued, unloved, and ugly), it's Tokyo.
At a recent dinner this writer attended with the glitterati of some of the world's major investment institutions, about half the group believed that over the next couple of years stock markets would set new lows below those of early March. Almost everyone agreed it would be a long time before a new global bull market emerged in the U.S. or the rest of the world. Instead, markets would trade within a broad, painfully low range similar to the one that prevailed from 1966 to 1982, when the Dow Jones Industrial Average wandered aimlessly between 500 and 1000. Considering all the financial and economic problems the world faces, it's hard to disagree, but I do.
Turkey, in the hot grip of the summer solstice, faces a hazy future. For a change, Turkey is suffering from an economic and financial crisis not of its own making. Its fiscal discipline and good behavior of recent years are going unrewarded as its economy contracts, its currency weakens, and its stock market gets ignored amid a historic emerging-market boom.
Equity markets around the world are surging in the face of the sickest global economy in more than half a century, a crippled banking system that needs billions of dollars of equity capital, a flu scare and house prices that are still falling at a dizzying rate. On April 30, the front page of The New York Times read ECONOMY SLIDES AT FASTEST RATE SINCE LATE 1950S. That same day, the German finance minister said his country would suffer "the worst recession since the Second World War" and that other European economies were in dire straits.
As Spring begins to come to the Northern hemisphere, green shoots are appearing not just in the shrubbery but in sickly economies. I'm not saying that there won't be some cold and rainy days in the months to come, but for the moment, it seems, winter is over. Obviously this is a big deal for real people and for beleaguered stock markets. The prospect of an economic ice age was what terrified investors, and the feeling now, that the world has averted depression, is a big reason equities in many parts of the world are in a sustained rally.
Many Newsweek readers already know that our columnist Barton Biggs, the legendary Wall Street strategist and hedge funder, believes markets are set for a new bull run . Today, I took a first