Stocks Gain again, Is it a Mirage?

Joachim Fels of Morgan Stanley feels even the Government bailouts of banks will offer only some relief as the world’s credit situation is still tightened. So, recovery would be a slow process and might take a long time. Though he ruled out a possibility of another 1930 depression, but expressed chances of worsening of the situation.

Data shows that amount spent by consumers and manufacturing capability of organizations is decreasing each day. However, there is still ray of hope seen by some, in the form of coming back of Commercial Paper market. This is advantageous for the corporate. Also, the Libor rates (for inter-bank loans) are dipping. This signals the gradual increase in risk appetite of investors, as they ready to venture out of the safest investments, US treasury bills. If this continues, sooner or later, the investors are thought to turn back to fundamentals and the crisis is bound to go away. Warren Buffett said that despite the expectations of even more disturbance, he is planning to head towards stocks.