Advocacy Investing Portfolio Strategies, Issue 28

LOSS OF CONFIDENCE

•The US loses its AAA rating

•The US economy is in a stall

•Broad-based loss of confidence feeds into a vicious circle of low investment, consumption and unemployment

•Global equity markets in a downward and self-reinforcing spiral

•The European sovereign debt stresses spread to Spain and Italy

•Panicked investors trigger technical correction

•At best, we face another quarter of sub-standard growth; at worse, another recession

The US economy is under severe stress as it enters the third quarter of the year. The negative impact of several months of mixed-to-negative data has been compounded by the dizzying Congressional debate over raising the debt ceiling and its messy resolution. A default might have been avoided, but damage done by this manufactured political crisis to investor confidence around the world will be felt across the spectrum and could be long-lasting.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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