Pretzels Were the Last Straw

02/26/2009 10:57 am EST

Focus: GLOBAL

Nancy Zambell

Editor, Wall Street's Best Investments and Wall Street's Best Dividend Stocks

You have to love it! The German government inadvertently created a ruckus with its new food labeling laws, raising concern among its populace that their beloved pretzel was going to be outlawed.

Outrage ensued, causing the bureaucrats to assure pretzel eaters that their big glop of salty bread snack remained intact. All I can say is—way to go, Germany! Tell the government that enough is enough!

We had out own taste of populist outrage here in the US in the brouhaha over President Obama’s plans to stave off foreclosures and stabilize the housing market.

The President took to the airwaves Tuesday, trying to reassure citizens that we will find a way out of this economic distress. US markets rose before the speech, as the Dow Jones Industrial Average rallied 236 points Tuesday.

However, the talk adopted the “we will survive” mode, and most pundits felt the President didn’t cover any new territory or specifics. Coupled with the news that existing home sales fell by 5.3% last month, that caused US stocks to sell off again Wednesday.

Global markets were mostly positive Wednesday after Federal Reserve Chairman Ben Bernanke downplayed the possibility of nationalizing US banks. The FTSE 100 index rose 0.9% and the Nikkei was up 2.7%, but the FTSE 300 index hit a six-year low.

Banking problems continue to put pressure on most global economies. Talks between Royal Bank of Scotland (NYSE: RBS), Lloyds Banking Group (NYSE: LYG), and Britain’s chancellor of the exchequer, Alistair Darling, about how to handle the toxic assets on their books have temporarily gone astray, but both sides hope to reach agreement on an up to £500 billion plan soon.

The UK took some heart in its latest gross domestic product (GDP) figures, which—surprisingly to forecasters—remained unrevised at 1.5% for the fourth quarter of 2008. And because almost half of the £5.9 billion decline (over the same period in 2007) was due to inventory clearances (not falling demand), analysts were somewhat positive, especially since the previous nine consecutive quarters showed rising inventories. Whole-year GDP growth, however, came in at 0.7%, its lowest since 1992.

The UK doesn’t have to suffer alone, however. In January, Russia’s economy contracted at an 8.8% annual rate. Forecasts for that country for 2009 continue to be dismal, with credit frozen, for the most part.

Fourth-quarter GDP for Japan declined 3.3%, while Germany’s fell 2.1%. And January’s industrial output in Japan is estimated to have slid by 10%, on the heels of its 45.7% fall in exports that month.

The Times reported that European markets are considering a new European Systemic Risk Council (ESRC), chaired by the European Central Bank, and including banking, insurance, and securities supervisors. It could include (by 2011) two new bodies—centralized and national—to regulate banks.

Meanwhile, our contributors are busy looking for strategies and recommendations that will aid investors in their recovery.

This week, Cynthia Tusan, president of Strategic Global Advisors, explains her bottom-up investing strategy for global markets.

Pratik Sharma, principal at Atyant Capital Partners, shares his outlook for the Indian markets in 2009.

Moving on to Canada, Benj Gallander, editor of Contra the Heard, writes about a beaten-down factory automation stock, while Carlton Delfeld, editor of the Chartwell Global ETF Letter, likes a Hong Kong ETF over its Chinese counterparts.

Hold onto your seats, as I’m sure the volatile market ride is going to continue for a while. Have a good week!

Nancy Zambell edits Global Investing for MoneyShow.com. Her opinions are her own and not necessarily the views of InterShow or MoneyShow.com.

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