Mountains of jobs

Mountain top diplomacy…
A freezing-cold-and-isolated mountain top village may not sound like the ideal place for a gathering of the world’s business and political (too often too similar) leaders, as the Davos summit kicked off this week with an emphasis on the “road-to-recovery” – just the name pinned to the gathering is intended to evoke positive emotions amongst the uninvited (and warmer) public, eager to learn how the exalted ones will continue to spend..we mean “think” of course…their way out of the dangerous depths of economic recession and slowing growth. As the leaders lead, (denied) rumours of China averting a Greek tragedy increase – as strange as it first sounded when hitting the news-wires, China’s huge reserves ($2.4trn) would hardly notice the necessary out-flux of cash to end Greece’s embarrassing troubles and would serve as another expression of the much-touted shift in global influence to the East.

Toyota’s own red-face-inducing troubles have sadly amplified with a recent US recall spreading to vehicles delivered across Europe (1.1m are affected) – sharp falls in the company’s share price (-14% in 7 days) pointing to long-lasting damage to a once untouchably-lofty reputation. Seems Japan’s leading car-maker’s troubles are arriving exactly when most needed by struggling US firms – coincidentally, Ford and Chrysler have just launched suspiciously Japanese-like compact vehicles (for US car firms “compact” once meant less than 15ft-wide behemoths) not that there is any insinuation of corporate wrongdoing of course, that’s saved for the dispute between the French government and Renault, with Renault complaining they are being pressured to move production of eastern-European made vehicles back to France – no no, c’est pas vrai..the socialist-French-government would never interfere in corporate affairs now would they?

Which Job?
Jobs Jobs Jobs – not Steve Jobb’s new iPad, which does definitely look cool but can’t understand where it will fit (immediately at least) into the market between a phone and a laptop, not big enough to be a useful laptop (with no actual keyboard) but too big to fit into your pocket as a phone replacement – Obama’s jobs are in focus today. With US unemployment still hovering around 10%, in a typically eloquent and rallying State of the Union speech, where for a few moments - in front of the television cameras at least - US politicians did actually look united, a focus on continual job creation pandered to the masses - we’re talking the good old-fashioned hardened get-up-in the-morning and produce something useful to society during the day kinda job. Investment banking doesn’t really tick many of those boxes – in its modern super-destructive-super-derivatives-form at least.

Coupled with the (Volcker) proposed bank reforms, recently backed by George Soros but opposed by some (surprise surprise) bank heads, the White House administration is certainly trying its best to live up to the promise to relate to the very people that voted them in to power, rather than be influenced by even more powerful corporate lobbying groups and other “special interest” fund-raisers – a tough job to say the least and once that may unfortunately seal Obama’s fate as a one-term President. Despite declaring “the worst of the storm has passed” in reference to the economic crisis, one cannot help but feel the clouds above his head are only now gaining strength.

Over the jitters….
As all the above shapes its way into financial models and analyst forecasts, altering perceptions of possible future government measures, exit plans, re-entry plans and even planning plans, investors have been faced with a difficult month’s trading. We examined the emotional responses underlining investment decisions, suggesting these dips were offering good opportunities to increase positions in markets where recovery and market performance will combine for decent returns in what will surely be a tough 2010. So far today, Asia has put in a gutsy performance after a clearly difficult week, with China’s gentle push on the stimulus brake amplifying and affecting investor sentiment – today’s rise ends the worst falling streak for the MSCI Asia-Pac Index since 2004, Europe has picked-up on this positive turn and opened strong (+1.2% across the CAC40, FTSE and Dax right now), with US futures singing-along too – DJIA indicating +42pts and S&P 5.4pts. Gold and Oil have both hovered around levels reached earlier in the week ($1,092/oz, $74.3/brl respectively) as the USD oscillated and fell slightly in the last 24 hours (cable at 1.62) – some concerns US fiscal stimuli spending will continue to pressure the greenback

Warming up…
Investors are starting to recover from the sudden jitters that filtered through after the realisation that excessive amounts of lending will not continue forever, the return-to-earth slightly jarring for some but necessary. Now that the impulsive reaction has passed, long-term money-managers and the more strategically focused will once more set their sights on the general global recovery outlook, hoping that decent levels of GDP growth in many parts of the emerging world can continue to push the more developed markets through their restructuring (de-leveraging) periods.

Hopes will remain that those leaders “summiting” in Davos and shivering in the cold high-altitude winds will remain warm enough to make globally beneficial decisions. Nothing warms the hearts, hands and heads of a true-capitalist like the promise of mountains of cash.