However, Albert Edwards, global strategist at Société Générale, said (via the Financial Times): “I believe the bullish group-think on China is just as vulnerable to massive disappointment as any other extreme or bubble nonsense I have seen over the last 2 decades. The fall to earth will be equally as shocking.”

In the world’s second largest economy, the Bank of Japan opted not to make any changes to its monetary policy, stating that economic conditions in Japan “have begun to stop worsening."

A snapshot of the week’s US economic data is provided below.

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Quote, Unquote: Biased Credit Rating Agencies?
Airlines: People Won't Fly, So We'll Raise Fees
Trading Radar: GDP Highlights a Thin Week
California Oversteps with HDTV Regulations
Goldman, Beaten But Unbowed

Velocity of US Money Supply Finally Edging Up
The Dollar Is Burying Non-US Investors
Bernanke Built It, But They Did Not Come
Is the Risk Trade Back On?
Contraction in Bank Credit Worse This Time Around

• Index of Leading Indicators suggests worst is over
• Continuing Claims post large decline
• Philadelphia Fed Survey points to improving factory conditions

 
June 17
 

• Subdued inflation data leave room for Fed
• Significant improvement in current account deficit

 
June 16
 

• Housing Starts -- turning the corner?
• Factory Production and Operating Rate remain problematic
• Higher prices for energy and tobacco lift overall Wholesale Price Index

 
Also, Reuters reported that US credit-card defaults rose to record highs in May, soaring to 12.5% from 10.5% in April in the case of Bank of America (BAC). This is yet another sign that consumers remain under severe stress.

Summarizing the outlook for the US economy, Asha Bangalore (Northern Trust) said:

“For all purposes, although the nature of incoming economic data and current financial market conditions indicate that the worst is behind us, real GDP in the second quarter is projected to decline again. The headline reading of real GDP should show a noticeably smaller drop in the second quarter compared with the 5.7% drop in the first quarter.

“There is mixed opinion in the marketplace about the third-quarter performance of the economy. We expect the economy to gather steam only by the final 3 months of 2009. The FOMC’s projections show a decline of real GDP growth (Q4-to-Q4 basis) in 2009 to range between -2.0% and -1.3%. The bottom line is that the Federal funds rate will hold unchanged for several months ahead.”

Week’s Economic Reports

Click here for a summary of this week’s economic calendar from Yahoo.

In addition to an interest rate announcement by the Federal Open Market Committee (FOMC) (Wednesday, June 24), the US economic highlights for the week include the following:



Markets

The performance chart obtained from the Wall Street Journal Online shows how different global financial markets performed during the past week.

“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity. Both bring a permanent ruin. But both are the refuge of political and economic opportunists,” said Ernest Hemingway.

In these troubled times, let’s hope the news items and quotes from market commentators included in the Words from the Wise review will help Investment Postcards readers to spot the opportunities and invest wisely.

For short comments -- maximum 140 characters -- on topical economic and market issues, web links and graphs, you can also follow me on Twitter by clicking here.

Happy Father’s Day to all, and enjoy the longest summer’s day of the year!

That’s the way it looks from Cape Town in the heart of winter (that I will shortly be leaving behind for a 2-week visit to Slovenia and Switzerland).