It's time to be positive. While the American economy is a little weaker than I thought it was going to be, I don't think a recession is going to happen. Whatever degree of weakness we experience, the global economy is going to continue to move ahead. Agricultural and industrial commodities will continue to show strength. The Fed has shown that they are going to take aggressive action to minimize the impact of the mortgage problem on the U.S. economy, and if there is any side effect, it will weaken the dollar and stimulate commodities prices.
If you look at the fundamental underpinnings for the contraction of economies in developing countries, those factors are no longer present. Until recently, they were dependent on imports of capital to provide for investment into their economies. At the same time they tended to have significant current account deficits. When they had current account deficits it was the inflow of capital that provided the stimulus for growth. Today, they have large current account surpluses, and they don't need an influx of capital to cause their economies to grow. In terms of stocks, I think the long-term potential for Petroleo Brasileiro (PBR) continues intact. The company recently discovered the Jupiter field of natural gas--a major discovery off Brazil. So the pattern of favorable news continues.
Last updated February 06 2008: 10:16 AM ET
