This week we offer several articles to highlight key issues in the global economy and investment markets. The first one discusses the upcoming meeting of the Federal Reserve, which may shed some light on what actions the Fed will take at its meeting on June 19th and 20th.

Next we talk about the slump in Germany, something that hasn’t been widely reported. We also reference an article by John Mauldin about deflation, followed by inflation. We are starting to see more articles written on this subject. Finally, we have an article that discusses proposed legislation to change the regulation of the Registered Investment Advisors, which we strongly oppose.

Federal Reserve Considers More Action Amid New Recovery Doubts – The Federal Reserve meets again on June 19th and 20th. One of the issues they will discuss is whether further action is necessary to spur the economic recovery. Chairman Ben Bernanke will also testify before the Joint Economic Committee of Congress this Thursday, June 7th. The markets will be looking for clues as to what the Fed may do later this month.

Slump Indicates Germany Isn’t Immune to Eurozone Crisis­ – We have been reading for quite some time about the problems in Spain, Greece, Ireland, Portugal and Italy. However, as this article indicates, Germany is also being impacted by the broader problems across the Eurozone.

First Deflation, Then Inflation – More economists seem to be talking about the possibility of deflation. In this article by John Mauldin, he discusses why he believes we will go through a deflationary period as we continue to deleverage debt. Afterwards, he believes we will enter a period of inflation. He does not predict the timing of these shifts in the economy, but it’s interesting to read his thoughts on the matter:

Regulation of Registered Investment Advisors – The U.S. House Financial Services Committee has scheduled a hearing for Wednesday, June 6th. They will listen to comments on a bill backed by Chairman Spencer Bachus. He wants to shift the supervision of Registered Investment Advisors from the Securities & Exchange Commission to one or more self-regulatory organizations. We are strongly opposed to this bill. We believe this would add unnecessary regulation and expense to our industry.

We hope you enjoy reading along with us some of the many articles that keep us up-to-date on the economy and the markets.

Please call us if you have any questions.

John R. Day and Bill W. Ennis