At crossroads again...

The billion dollar question on people’s minds at this juncture is whether the economy is improving or actually worsening.
On the positive side we can give credit to a proactive Fed which, through its unprecedented actions has succeeded in nabbing a potentially global systemic risk at its bud. A continuous influx of much needed capital, from both sovereign and other sources have also helped in keeping the sickly financials afloat. We could also mention emerging markets, thanks to being in better economic shape with huge piles of cash and a greater savings rate, providing demand support for the wider economy of developed countries such as the U.S. where a weak dollar is contributing in making goods and services even more attractive.
On the negative side we have the ongoing imbalances in commodities that are threatening to trigger a price/wage spiral and social unrest across the globe. We can also cite the continued free fall in housing prices that the typical central bank toolkit is ineffective towards and a growing number of layoffs that can only contribute to shattering the little confidence that remains.
In our opinion, the most likely scenario will be for commodity prices to drop to more sustainable levels which in turn will relieve the large amount of pressure that has built up and allow the other imbalances, such as in housing, to run their course.