(Community Matters) from our friend Eric Price, founder of Price Wealth Management
While there has been much discussion around the recent S&P downgrade of U.S. debt, our feeling is that this news simply brought more instability to an already fragile capital markets. We believe the more relevant issues to focus on in terms of the financial markets would be the state of the global economic recovery going forward and the overall health of the European Union (sovereigns and ultimately the banks).
If the slowing of the economy was a standalone event, we would be starting to add to risk assets at these valuations. However, due to the global complexity of the European issues, we continue to remain cautious.
In order to methodically and routinely gauge whether this European situation creates another 2008 in the markets, we are watching the actions of the ECB (bond purchases and passing of The Stability Fund) and the activity in the interbank and short-term credit markets.