What is the real risk?

The US investment banking firm Jefferies & Co last week initiated its first quarterly publication for its clients, highlighting just how financial markets have changed in a little over two years.

It commented: “The S&P 500 is 16% off its all-time high, the FTSE 100 is 13.3% away from its lifetime peak, the B-rated High Yield index is around 7% and the global markets continue their comeback. “While the economy has clearly improved significantly, there remain issues of unemployment, budget deficits, real estate mortgages and looming inflation. The markets generally look forward and hopefully the broad economy will match the level of recovery in the financial markets.” On the day its note reached clients, Standard & Poor’s raised a warning over US debt levels – now at the extrao...