Jordan Wealth Management Group - ScotiaMcLeod Truro

I find it somewhat ironic that the bond rating agencies are now threatening to lower the credit rating of most European countries. We all know that Europe has a debt problem; so where is the surprise? Interestingly enough, depending on the rating agency; there are less than 20 counties in the world that are awarded the highest credit rating – and those include CANADA, European nations of Austria, Denmark, Finland, France, Germany, Luxenbourg, Netherlands, Norway, Sweden, Swizerland, and the United Kingdom. The US has already been downgraded by one of the agencies. Once we are done, the only counties left will be the likes of Singapore and China (rising). So eventually, one or two notches below will be the new Triple A.

The most important headlines from the past week were that the Bank of China is easing and reducing reserve requirements and there was jobs growth in the U.S. China’s move should mean more positive markets on a sustained basis, and the US situation at least shows some stability while they face gridlock in decision making until their elections are done next November.

In addition, the move by multiple countries last week to add liquidity into the global system was positive and was necessary. While it was only a short term solution to hold things together

I am in the camp that believes the European Union will survive – perhaps without Portugal and Greece worst case, but largely intact. It has to. Too much business and too many contracts between businesses are based on Euro dollars. The weak Euro has been a big benefit to Germany’s export driven economy (40% of GDP), and if the Euro did not survive and Germany went back to the Deutche Mark, it likely would appreciate a lot in value and that would then hurt their economy in a big way. Imagine all the contracts based on Euro dollars that would go into limbo and have to be rewritten. This would seriously damage an already weak economy. The results could easily then be Europe Going into a depression, not a recession next year, and that would then cause a global recession. I believe that Europe and the multinationals are not willing to go through it.

I can’t sugar coat it – this week and the next will be tough – there will be so many meetings – public and in back rooms, and rumours that will move the psychology of the market. There likely will be some surprises – hopefully good ones, but who can tell. Please try to stay calm throughout this, let me do as much of the worrying for you as possible, remember that we will still be buying groceries and buying gas and turning on our lights regardless of events, and we will continue to adapt to circumstances as they unfold. No challenge is insurmountable, and strong companies will continue to prosper.

Please call me in the meantime if you want to talk.