THE BIG ANNOUNCEMENT - I

FED’s Chairman Ben Bernanke made the long awaited announcement on the 16th of September that recession is over for USA.

I have been waiting to hear this for a long time, more impatiently after Germany, France and Japan declared growth for quarter two - 0.3%, 0.3%, and 0.6% respectively. - The fact that Bernanke made the announcement before quarter-three ended is signalling that I am not the only one. The main reasoning is the expectation that USA should lead the world out of this Great Recession earlier than anyone else as it led into it the first. Basically FIFO – First in First Out - principle of inventory management was my presumption but we had LIFO – Last in First Out – this time.

Quarter-three & four figures in growth are needed before making the judgement that it is really heading to be over. Forecasts have been quite movable with daily-weekly-monthly changing announcements during the first half of 2009.

On the positive side US monthly unemployment figures have fallen from an approximate average of 700k per month in first quarter to 539k in April, 345k in May, and finally 216k in August. Downward slope is a good sign. Also improving consumer confidence reflected through increased sales is supportive.

On the negative side though, there is still a nervously waiting banking sector, focused on saving its own life – through increasing high quality Tier-1 capital- and can barely help anyone else. The sector is still in intensive care except few big names on Investment Banking side such as Goldman Sachs and JP Morgan Chase. Those names were accepted as successful based on the basic fact that they could pay back the Troubled Asset Relief Funds borrowed from the US government.

Will see what comes up with the figures…