Speaking before 4,200 shareholders in Basel, Switzerland, Chief Executive Officer Marcel Rohner said the bank would look to reduce expenses, particularly in its investment banking division.

First created in 1998, the bank’s securities division has earned $32.48 billion (32.5 billion francs) since its inception. That figure has now been completely offset by the $37.5 billion (38 billion) in losses the unit has incurred since the subprime crisis began to unfold last summer.

UBS will “no longer aim to offer everything to everyone in investment banking,” Rohner said. The bank would announce job cuts at the unit next month in order to make expenses more compatible with the securities unit’s “new positioning,” he said.

In addition to cost-cutting measures, shareholders approved another capital infusion of $15 billion. That’s on top of the $13 billion already raised from sovereign wealth funds in Singapore and the Middle East.

Ospel Ousted

UBS shareholders booed the selection of General Counsel Peter Kurer as the replacement for former Chairman of the Board Marcel Ospel.

Ospel, 58, who started his financial career in securities trading at Merrill Lynch & Co. Inc. (MER) has been lambasted in the Swiss press for overexposing UBS to the U.S. subprime crisis. UBS losses are the largest of any foreign bank.

And while most were pleased to see Ospel replaced, many objected to the selection of Kurer, 58, as his replacement.

“We have heard no justification as to why a credible search for an external chairman has not been undertaken,” former UBS President Luqman Arnold, whose London-based investment group currently holds 1.1% of UBS shares outstanding, said in an e-mailed statement, Bloomberg News reported. “We are skeptical whether a supervisory board led by legacy insiders will be the agent of change that UBS needs.”

There had been some speculation that Germany-based Deutsche Bank AG (DB) Chief Executive Officer Josef Ackermann might be tapped for the role, as he is a Switzerland native and is seen as having the experience needed to helm a large banking operation facing the type of risk management issues that UBS is confronting.

“At least half of the board should be made up of banking experts,” Dominique Biedermann, director of Geneva-based Ethos, who has been very critical of UBS management, said yesterday.

In an attempt to reassure discontent shareholders, Kurer affirmed that UBS is not for sale while acknowledging the monumental task before him.

“I am not here to defend the choice” of the board, Kurer told shareholders. “It is an honor for me to stand in front of you today, but I do so fully aware of the magnitude of the tasks ahead of us, of the work that is required to bring UBS back to the premier ranks of banking.”

UBS shares traded on the New York Stock Exchange dropped 2.6% for the day, with a decline of $0.92 to close at $34.46. Shares have traded in a range from $22.19 to $66.26 in the past 52 weeks.

On the surface, the financial news of the week was less than favorable.  Swiss bank UBS AG (UBS) said goodbye to its Chairman, Marcel Ospel, and announced its intent to issue new stock to compensate for an anticipated first quarter loss due to another $19 billion in mortgage writedowns.  Likewise Deutsche Bank AG (DB), Germany’s largest financial institution, revealed it expects to write-down over $4 billion of assets as the credit crisis turns even more global.

Lehman Brothers Holdings Inc. (LEH) looked to shore up its balance sheet – and avoid becoming the next The Bear Stearns Cos. Inc. (BSC) – by offering a new class of convertible preferred stock that raised the needed cash, but further diluted current shareholders’ interests.

U.S. Federal Reserve Chairman Ben S. Bernanke was forced to vehemently defend the Fed’s actions in the Bear “bailout” before a Joint Economic Committee bent on grandstanding in an election year.  Bernanke also admitted (for the first time) that the economy is dangerously close to experiencing the dreaded “R” word.

And the labor picture is looking bleaker with each passing month.  Celent, a financial research and consulting firm, reported that 10% of the 2 million domestic commercial banking jobs will be lost (does “downsized” sound better?) over the next year-and-a-half.

Energy prices climbed again as the weekly inventory report revealed that supply is shrinking just as demand is increasing.  In fact, retail gasoline prices soared to an all-time high of over $3.30/gallon.

Market Matters 

First quarter 2008 came to a close and none too soon for most investors.  The Dow Jones Industrial Average Index suffered its worst three-month loss (in terms of points) in its history and experienced its most negative quarter in 5.5 years; likewise, the S&P 500 Index fell in March for the fifth consecutive month, its longest losing streak in over 17 years.

At quarter-end, both the tech-heavy Nasdaq Composite Index and the small-cap Russell 2000 Index had fallen about 20% from their October 2007 highs, a significant percentage that typically signifies a bear market.

And yet, investors seemed to take all of the news of the week in stride and sought out any bargains that existed in the aftermath of the past quarter.  Stocks surged on Tuesday, the first day of April and the second quarter, and never really looked back.

Some analysts claimed the aggressive UBS and Lehman actions to increase capital indicated managements’ confidence that the credit crisis is nearing an end.  Others believe labor statistics lag certain economic indicators and the negative employment data represents the “beginning of the end.”  Still others trust Dr. Bernanke and remain confident that he will continue to lead the economic rescue efforts.

Whatever the reasons, this past week was a welcome relief from the dismal first quarter.  If widespread negativity is going to have unexpected effects and boost investors’ confidence while pushing the markets higher, then more good news may be on the way.  Earnings season is just around the corner and most analysts expect feeble first quarter results.  Further, the advance gross domestic product release on April 30 may reveal economic contraction.

Bring it on… after all it seems “negative is positive” these days.

Weekly Economic Calendar

Who can be trusted more for calculating economic statistics: the public or private sector?  This week, investors got a look into the labor market from two independent sources and the results seemed to be quite different.  According to payroll consultant Automatic Data Processing Inc. (ADP) and research firm Macroeconomic Advisors, 8,000 new nonfarm jobs were added to the domestic economy in March, an indication that labor may be weakening, but still is experiencing growth.

Conversely, the Labor Department reported that 80,000 related jobs were actually cut last month, the largest contraction in five years and the third straight month of losses.  Additionally, the unemployment rate jumped to 5.1% and now stands at its highest level since September 2005.

So (over-)analyze the data and pick your poison.  But unfortunately, labor is slowing no matter who is calculating.

The other economic releases reflected continued sluggishness, though most of the results were better than predicted.  Home construction fell again, marking two straight years of monthly declines, and yet the percentage decline was not as bad as many economists had feared.  Both the manufacturing and services sectors revealed only slight contractions in March (as measured by their respective ISM indexes).

And while Fed Chair Bernanke finally admitted in congressional testimony that the economy “will not grow much, if at all…and could even contract slightly,” he also said the he felt the downturn would be short-lived. He believes the Fed’s aggressive (and creative) actions should combine with the $168 billion government stimulus package to generate growth in the second half of 2008 and beyond.

It was a marked contrast to the first trading day of the first quarter when the Dow Jones Industrial Average Index suffered its weakest first trading day (in percentage terms) in the past 25 years and never looked back.

For the first quarter:

• The blue-chip Dow lost 7.5%, its worst showing in 5.5 years (or just after the tech bubble burst).
• The tech-laden Nasdaq Composite Index plunged 14.1%.
• And the broader Standard & Poor’s 500 Index dropped 9.9%.

Compare those dismal stats to the first three trading days of April as of yesterday’s close:

• The Dow has posted a gain of 363.14 points (3.0%), to close at 12,626.03.
• The Nasdaq has increased 84.20 points (3.7%), to reach 2,363.30.
• And the S&P 500 has gained 46.61 points (3.5%), to hit 1,369.31.

According to Yale Hirsch’s The Stock Trader’s Almanac, on average since 1950, April has been the best performing month of the year for the Dow with an average gain of 1.8% for the month.

If April continues the way it has thus far, 2008 should prove no exception to that rule.

The first quarter of the year will likely be remembered for the U.S. Federal Reserve’s emergency bailout through JPMorgan Chase & Co. (JPM) of the fifth-largest domestic investment bank, The Bear Stearns Cos. Inc. (BSC), but the quarter was host to a bevy of negative news among financials as Citigroup Inc. (C) and Merrill Lynch & Co. Inc. (MER) posted record losses and suffered through the worst quarters in their illustrious histories.

In Lehman’s Terms

More recently, Lehman Brothers Holdings Inc. (LEH) has fought off speculation that it would be the next to falter and remained alive and kicking at quarter-end.

Thus far in the second quarter, the financial sector has been playing a different tune. The sector is up over 5% for the month versus its near-12% decline in the first quarter.

Shares of Lehman Brothers are up over 17% after the firm announced it would offer $4 billion in convertible preferred stock. Investor response to Lehman’s offering has been overwhelmingly positive. Lehman stock has gained $5.68 in April to close at $43.32 yesterday (Thursday).

“It’s three times oversubscribed; people are interested in investing in Lehman,” Art Hogan, chief market strategist at Jefferies & Co., told MarketWatch.

Meanwhile, UBS AG (UBS) also announced it would try to raise additional capital and despite estimating a $19 billion first quarter loss, U.S.-listed and European-listed shares rose on the news that Chairman Marcel Ospel would step down. Shares have gained $3.69 in the first three days of the new quarter to close at $32.49 yesterday.

“To the extent the market is comfortable that they’re able to add to their capital base, it means we are working our way through these problems,” Alan Gayle, senior investment strategist at RidgeWorth Capital Management Inc., which oversees about $74 billion in Richmond, Virginia, told Bloomberg News. “There’s hope we’re seeing the end of the write-offs.”

In early January, a WSJ.com poll showed that 42% of economists surveyed felt that the dreaded “R” word was inevitable. As the dire first quarter progressed, that number had jumped to over 70% by March, with many of those same economists now believing the country was already stuck in the midst of recession.

By true definition, a recession is marked by two straight quarters of negative growth.  That means it’s quite possible that a recession can only be identified after the economy is working its way to the other “R” word – recovery.

In the fourth quarter of 2007, gross domestic product eked out a feeble 0.6% gain, far lower than the 4.9% growth rate experienced in the third quarter, but still ever-so-slightly positive. So while a textbook definition recession may have not reared its ugly head quite yet, many of those same “experts” anticipate first and second quarter GDP data to reflect flat growth or an economic contraction.

But on an optimistic note (for a change), Ned Davis Research indicated that over the last 10 recessions, equity prices have soared on average 24% within just six months of hitting their lows.

That means if we did hit “the” bottom in the first quarter, investors could be seeing some nice gains by the start of the fourth quarter.

Even as stocks soared on Tuesday, news filtered through from Switzerland of yet another enormous quarterly loss and billions of dollars in write-downs from one of the world’s biggest financial institutions. UBS AG (NYSE: UBS) will suck up a first-quarter loss of $12.1 billion, following write-downs of $19 billion. That brought the total amount of UBS write-downs over the past nine months to $37.4 billion – the largest of any bank – and was enough to force the resignation of Chairman Marcel Ospel.

It has raised another $15bn or so in a rights issue to prop up its balance sheet, on top of $13bn already raised from Singaporean and Middle Eastern investors. The chairman, Marcel Ospel, stepped down.

Meanwhile, Lehman Brothers, which had been seen as potentially the next Bear Stearns, managed to raise $4bn to shore up its own finances.

Naturally, share prices on both sides of the Atlantic rocketed…

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Wall Street and the City are hoping that this little episode marks the beginning of the end for uncertainty over the financial system. Surely, after this latest write-off, UBS must have revealed the worst. And as for the $4bn fund-raising at Lehman – the group had originally only been looking for $3bn. Demand was so strong from institutions that it jacked up its sale by another whole billion dollars.

So the hope is that we’re starting to put the worst behind us, and soon we can all get back to business as usual.

However, there are a lot more things to worry about. Even if the latest write-downs represent a beginning to the clear-out, we won’t see a return to the days of easy credit for a long, long time. Lehman Brothers’ rights issue was over-subscribed, but it’s not that surprising, given the terms on offer. The convertible preference shares pay a 7.25% dividend yield.

But as Adam Compton at RCM Investors told The Times: “If there is a question that a bank may need funds in the future, it is better to raise it sooner rather than later, because funding is only going to get more expensive.”

Meanwhile, the problems in the financial world have spread far beyond the City and are now firmly entrenched in the ‘real’ economy. Even in the days before credit derivatives became so widespread, a worsening economic environment was always bad news for banks. With so many other dodgy debt instruments linked to corporate defaults and credit card debt out there, we can expect to see more parcels of toxic debt revealing themselves as conditions worsen.

On employment, for example, there’s the small question of what will happen to the 9,000 staff working in UBS’s London offices, as well as all those other City staff who suddenly face an uncertain future.

Why Central London house prices aren’t immune to the crunch

This is already having an impact on the Central London property market. Remember all those super-prime houses that property bulls kept saying could never fall in price? And all that stuff about oligarchs and wealthy oil sheikhs keeping London afloat, because it’s such a great place to live?

Well, Knight Frank has just reported that sales of Central London homes worth between £1m and £5m fell by 20% in the first quarter. Apparently, houses in the £3m to £5m bracket were the worst affected.

Sure, it’s City employees rather than wealthy Russians who are being forced out of the market by employment fears or because their bonuses are drying up. But most rich people didn’t get rich by being stupid. The odd million pounds here or there might be peanuts to an oligarch, but he’s still not going to pay £5m or £10m for something he reckons he’ll be able to get 10% or 20% cheaper in a couple of year’s time. Nobody likes losing money, particularly when the outlook for the global economy is so uncertain.

And how attractive will London look to party-loving foreign billionaires in the middle of a recession?

As for the rest of us, well, house prices for mere mortals are already in the doldrums, and now we hear that First Direct has just completely pulled out of offering mortgages to new customers. The bank has been swamped with demand for its products, including its 4.95% two-year fixed mortgage deal, seen as one of the most competitive currently on the market.

The HSBC-owned bank says the withdrawal is a “temporary measure.” Chief executive Chris Pilling, told The Times: “Rather than increase interest rates dramatically to discourage new applications, we’ve decided to temporarily withdraw from offering mortgages to non-customers until we’ve cleared the backlog.”

It’s perhaps a more honest way of doing things, but it makes for some scary headlines. “Bank pulls out of mortgage market” is the front page of The Telegraph today. It might be the first, but it certainly won’t be the last.

The Dow boomed up 391 points. Gold, meanwhile, got whacked – down $33 to close at $887.

Oil held steady at $100; the dollar rose against the euro – to $1.55.

This morning, markets in Asia have already popped up. The banking crisis is over, says a headline on Bloomberg. The bad news is already priced in. If you believe the report, the departure of UBS chief Marcel Ospel marked the absolute bottom of the decline in the financial sector. It’s all up from here.

What do we make of this?

Well, let’s step back and take a look.

The danger, of course, is that the markets are signalling that we are dead wrong. Stocks are healthy…gold is not. That’s what yesterday’s news could be telling us. If that is so, we want to close out our Trade of the Decade right now, hole up in a monastery somewhere, and rethink our whole weltanshauung. In the thin air and dim light, with no alcohol available, perhaps we’ll be able to see things more clearly. We’ll come to realise, finally, that paper money really is a good thing; that Alan Greenspan and Ben Bernanke are not only geniuses, but saints too; that Wall Street labours night and day for the betterment of mankind; and that now is the time to dump gold and buy stocks.

Maybe.

First, we have to recognise that no matter what is the long-term trend, it’s not going to announce itself like new ambassador to the Court of St. James. Instead, it’s going to sneak in like a thief in the night. We’re not even going to realise it has been here until we wake up the next morning and find the silver missing.

Looking around, we see a strange and marvellous scene. On the cover of yesterday’s Independent newspaper, for example, there is a photo of a long line of people lining up for food stamps in New York.

“The Great Depression,” says the headline. “Food stamps are the symbol of poverty in the US. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive – a sure sign the world’s richest country faces economic crisis.”

Again, we see the sad evolution of the US of A since the end of the ‘60s. Then, fewer than five million people received food stamps. Now, there is nearly six times that number living on them…after, what was supposed to be the biggest boom the world has ever seen. Of course, dear reader, we know that the boom was a phoney. It made Indians and Chinese much, much richer. But Americans were left out. They got to spend their wealth, not make more of it. And now, nearly 26 years after the boom began, Americans find that they owe more money to more people in more places than any people ever did. What’s worse…while wages shot up among our old adversaries – Russia and China, in the 50 states, the average person earns about the same thing, in real terms, as he earned during the Carter administration.

And now, to make matters worse, he faces an economic downturn.

Comparisons with the ‘30s keep coming up. The last time there was a nationwide drop in the housing market was in the ‘30s. Not since the ‘30s, has there been such a crisis in the finance sector. And the last time there was such a hubbub of pressure to reform Wall Street was – you guessed it – the ‘30s.

And yet, for all the talk of ‘depression’ – where is it? It is nowhere. So far, the depression is as phoney as the boom that preceded it.

In the real Great Depression of the ‘30s, thousands of US banks failed. How many have failed recently? One out of every four working people (usually men, in that era) was out of a job in the Depression. Now, the unemployment rate is one out of every 20. In the Great Depression growth went negative. In nominal terms, GDP was almost cut in half during the ‘30s. But so far as we know, US GDP growth is still positive. The IMF, always a little behind the times, says the US will post a 0.5% growth in ’08.

And what about the stock market? The Dow hit its peak on Sept. 3, 1929, at 381…collapsed…rebounded…and sank again. By the time it was over, the Dow had sunk to 41. So far this time, the Dow is off 7%. And yesterday, it shot up more than the entire Dow value in ‘29. US stocks still trade at 18 times earnings – compared to barely 8 at the bottom in the ‘30s.

Obvious question: where’s the depression?

Obvious answer: there ain’t one…at least, not yet.

Obvious next question: then what’s causing so much trouble?

*** There ain’t no Great Depression. But that doesn’t mean that there aren’t a great many depressing financial statistics…and a great many financial decisions in need of correction…and a great number of people who will wish they had done things differently.

But yesterday, stock market investors seemed to think the worst that could be seen had been seen; it was time to bid up stocks again.

Of course, investors always think they see the end…long before the end actually comes. In ’29, the greatest economist of his day, Irving Fisher, proclaimed the sell-off over in November. The market “was only shaking out the lunatic fringe,” he observed. Of course, it soon shook out everyone else.

And in 1990, the Japanese stock market also began to collapse. Then too, the greatest minds of the time – in America as well as in Japan – looked with favour on the Nikkei. The index hit its high of 39,000…and then began an historic decline. At 35,000…30,000…and 25,000 analysts pronounced the crisis over. Each time the Nikkei fell, it was another “buying opportunity.” But the collapse didn’t stop. It kept going until 80% of the Nikkei’s capitalisation had been wiped out. Now, 18 years later, you can still buy Japanese shares at 60% off.

While US business still seems fairly solid, generally, the financial sector is hurting. The banks say they will cut as many as 200,000 jobs. George Soros, speaking on the BBC last night, said he thought this was just part of a very big, very long credit cycle downturn. Credit has been expanding since the end of WWII. Now he thinks it will contract for a long time.

Corporate bond sales are down 32% in the first quarter. “Failure rate rockets for buy-out companies,” reports the Financial Times.

Charles R. Morris has a new book out. “The Trillion Dollar Meltdown,” he calls it. He says we’ve only seen the beginning of losses in the financial sector. In addition to subprime, there will be mega-losses in high yield bonds, leveraged loans, credit card debt and credit default swaps (which alone represent about $45 trillion of face value).

We mentioned the troubles in ’29 and in Japan deliberately. The current crisis (to the extent there is one) has its roots in finance – just as those two did. Most often, a recession is led by the real economy, not finance. Typically, the economy went into recession and pulled down stock prices. This time – as in ’29 and Japan – the crisis is POTENTIALLY more dangerous. Because it is finance pulling down the rest of the economy.

The part of the economy in worst shape now is the consumer. He’s the one whose salary has not gone up. He’s the one whose house is being foreclosed. And he’s the one who’s got to buy gas and food.

Banks now have twice as many foreclosed houses as they did a year ago. People take bus tours of foreclosed properties – looking for bargains…and generally depressing prices all over town. In Philadelphia, according to one report, they’re going to stop selling the foreclosed properties – to give the housing market a chance to recover.

People are buying fewer SUVs. Hummers are having trouble finding buyers… (We have a brother in Virginia with one; he says his daughter refuses to ride in it, citing environmental damage). Consumers are getting more careful when they go to the grocery store.

And even in the Hamptons, apparently the housing market is in a slump.

*** “We’re so sorry…but maybe you should come back when you have more money,” said the bank manager. We were trying to open an account in London at a private bank. But it was a club that we couldn’t join. Not enough money.

No matter how much you have. You will always feel like you don’t have enough.

The rally comes despite heavy writedowns from Swiss banking giant UBS.

The uncertainty about the markets’ direction reflected the fact that stocks rose after another round of bank writedowns and capital-raisings – developments that might have been expected to send prices lower.

However, UBS added to the previous session’s 12 per cent advance sparked by news of the departure of its chairman. The Swiss bank said Marcel Ospel was standing down in the wake of $19bn of new writedowns and plans for a SFr15bn ($15bn) rights issue. Its shares rose a further 0.4 per cent to SFr32.9 on Wednesday.

In New York, Lehman Brothers, the US investment bank locked in a battle with short-sellers betting on its demise, surged 18 per cent after it said it was increasing Monday’s $3bn capital-raising by $1bn.

Forget the big bank, says Steve Sjuggerud. Small banks are where the profits are at.

“The good part about the small banks is, they generally stick to their knitting – taking deposits and then making loans. They simply earn a spread… They charge more interest on the loans they make than they pay out as interest on their deposits.

“Small banks are generally not like the big banks. Big banks do try to get fancy, with derivatives trading, massive leverage, and such.”

In 1957, the BBC’s usually serious current affairs programme Panorama ran a feature on spaghetti trees being harvested by the Swiss. The really good news for the spaghetti farmers they said was the malevolent and highly destructive spaghetti weevil had been eradicated. Afterwards, the Beeb was bombarded by viewers interested in cultivating their own spaghetti trees.

In the absence of any obvious spoofs today the news throws up a few candidates:

UBS – many more billions destroyed for the Swiss bank on the broken porches of America’s derelict neighbourhoods – surely the investment equivalent of trying to cultivate spaghetti trees. Bank chairman Marcel Ospel is stepping down and a rights issue is in the works. Mr Market appears relieved at the news. The shares were up 6% this morning, though less than half the price of one year ago.

Max Mosley – President of the Formula 1 motor racing governing body Federation Internationale de l’Automobile (FIA) and son of one-time notorious English fascist Sir Oswald Mosley. According to a Times report Mr Mosley “…spent five hours with five prostitutes in an underground torture chamber in Chelsea last Friday indulging in sado-masochistic sex.” Ouch. More on the offspring of notorious fascists, including Hitler’s nephew, used car salesman Paddy Hitler, can be found in The Times.

Robert Mugabe. Could it be Zimbabwe manage to dump the old tyrant who has brought this once prosperous country to its knees? A nation remarkable now for all the wrong reasons – hyper inflation, the lowest life expectancy and one of the highest rates of AIDS infection.

Ex-Diana butler Paul Burrell, paparazzo James Andanson and Harrods department store boss Mohamed al-Fayed’s head of security John Mcnamara. All branded liars by Lord Justice Scott Baker in the never-ending inquest into the death of Princess Diana which found “no evidence” to support claims of an Establishment plot. Its reported cost to us, the taxpayer, is £6m. All that to get to the point most reasonable-minded folk had reached a decade ago.

Okay, enough fooling. But just to be out of the first quarter of the year feels like a relief. Anyone chancing their money in the stock market has had a rough ride. The FTSE 100 notched up its worst performance in more than five years, says ODL Securities in a note – down 11.7% since January. The sharp sell-off presents a buying opportunity argues Charles Stanley. The prospective PE is now a modest 10.7x against a historical average of 14x with many juicy yields to be had (assuming they don’t cut!) that exceed the 10 year gilt yield of 4.4%.

But then when recession comes earnings fall and those slippery PE numbers can start making fools out of us. The trick to smart investing, as Mark Slater (son of Jim, and a chip off the old block) once commented, was finding those companies where earnings were going up so fast that at some point the company would be re-rated by the market thereby boosting the share price. But then the reverse is also true – we can find the anticipated re-rating soon becomes a depressing de-rating, crushing the stock and exciting only the short-sellers.

In the US, estimates for earnings have been falling as the economic outlook got worse. At the start of the year analysts forecast 4.7% earnings growth for the S&P 500 companies in the first quarter. This was reduced to a fall of 5.5% forecast last week and a fall of 8.1% forecast this week says a Reuters report. Quite a rehash in a short time. Charles Stanley notes that in the course of a typical recession earnings decline 30% but current estimates are for 13% growth. This looks “optimistic” it says with admirable understatement.

Falls of up to 20% in Europe over the past quarter have been led by banking fools UBS and SocGen. Japanese stocks (this editor’s least favourite stock market) continue to go nowhere though appear to have escaped little direct exposure to subprime, circa $5bn. It faces its own housing slump and recession too, say Charles Stanley.

Emerging market stocks in bubble markets such as China and India have been flattened. As colleague Manraaj Singh, editor of Profit Hunter, noted: “the benchmark Chinese Shanghai Composite Index fell three per cent yesterday – that puts it 43 per cent below its record high last October and down 34 per cent since the beginning of the year.” China’s 300 leading stocks now trade on a less bloated 19.5x, says Manraaj, against over 30x previously.

China is not without her problems. Charles Stanley notes its inflation rate is now near 9%. Any readers who caught last night’s Channel 4 Dispatches programme on what the Dalai Lama calls the ‘cultural genocide’ of Tibet will wonder how this summer’s Beijing Olympic Games are going to pan out. Economically Tibet itself is undergoing a boom as money and miners flood in to exploit its natural resources. Tibet boasts half the world’s lithium and large copper and chromium deposits, says The Week. There’s gold and oil there too.

“Is the UK going into a recession in the next year?” That was the question posed on our website last month and this is the response:

14% said “no”
21% said “yes, within 3 months”
29% said “yes, within 6 months”
34% said “yes, within 12 months”

Lehman Bros recently upped the probability of a UK recession to a 1 in 3 chance. Fellow Reckoners think that’s way too optimistic. It’s a 1 in 2 within six months and a near racing certainty within a year.

The new poll for this month asks: Which out of these precious metals will be the star player in April and have the highest price rise?

Gold, Silver, Platinum or Palladium

Visit the website to vote, it only takes a second.