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 FED Keeping the rates fixed - How long will it last?

There might be many things to be worried about the US economy but the market still moving up week by week. The IMF is though overall positive regarding the economy and predicts that the global economy only slightly will be affected by the slowing US growth. The global growth will sliding down to 4,9% for 2007 from 5,4% for 2006. That means that the global growth will be around 5% for the fourth year in a road, the strongest growth in 30 years. I think that much of that comes out that the start of the 20th century was the toughest for a very long time.

So why is the market keep on moving up when the US economy is slowing? At this stage it seems like Europe and Asia is taking on the US weakness and the growth for in example Europe and Japan have been moving up from 1,5% to over 2,5 % in a short amount of time. Another fact the slowing US economy is because of the housing market, the big effect comes if the private consumption coming in weak further on.

Considering the impact of the US weakness the global economy is not as sensitive as most people thinks. Chinas export to the US is only around 6% of the total GDP, but it is though increasing.

The market seems to think that FED is closer to an interest decrease than before, that FED is more worried for a recession than the inflation getting out of control.

Global Stock market

This part will consider regions as the US, Europe, the Nordic region, Eastern Europe, South America and Asia. A strong global growth have been moving almost all markets to good result for 2006 and below is quick overview of areas for the 2007.

Another good week for the Balkan region. The Nordic region also holding up and Japan had a good week though the start of 2007 not been strong though the fundamentals for a good 2007 seem to be there.

Raw materials been coming in focus when as I been giving focus the last month metals is been moving up strong with Copper in the lead. China is the answer to the copper price move, the China import of copper is almost 60% higher than the same period of 2006.

Currency

Last weeks predictions that the dollar should be moving sideward for a while before taking off again was wrong and the dollar just keep on weakening and the market seems to looking forward to that the weakness in the US economy will make FED cut interest rather sooner than later. The best case for speculating in currencies right now seems to be taking on China versus the US. The US seems to be trying to keep on taking cut to handling there great deficit by letting the dollar weakening to make the export getting stronger and by that hold the deficit under there arms. China on the other side might revalue there currency to stop the increasing inflation rate being seen the last couple of months. This scenario will keep the trend intact.