Back from Zurich -Sunday thoughts.

Back from giving a speech in Zurich. General feeling among Swiss managers was that equities have a place in portfolios as long as actively traded and restricted to strong franchises with access to bank capital. Small and medium sized companies simply not being touched. There was some enthusiasm for gold but with a preference for physical as opposed to ETF's. General laughter greeted the thought that the all embracing lack of confidence in the market based on the poor '08 reported results marks the darkest hour before the dawn and a strong upside rally - a capitulation on heavy volumes still is needed - forecasts of DJII to 5600 and DAX to 3000 based on no broad earnings recovery until 2011 were widely discussed. Private clients are still driven by fear amid growing signs of social unrest - the general strike in France next month will be closely watched. The U.S State Department has added Mexico to its watch list noting that ' large firefights have taken place in many towns and cities across Mexico.U.S citizens have been trapped and temporarily prevented from leaving the area'. In this environment risk is still very much premium rated.

Love CNBC - so much more interesting than the alternatives. But, am I the only one who thinks that they seem to be blaming everything on Obama's stimulus package or his mortgage foreclosure amelioration plan? Was very worried about the widely broadcast rant against the mortgage plan - yes it could lead to moral hazard but it might also help prevent a collapse in house prices that could wash away many, many more households and financial institutions. This ill tempered sniping undermines market confidence.

UK government revenues in January were a nightmare. For the next fiscal year starting in April it looks as if the government will only be able to raise £2 out of every £3 it plans to spend. That can't go on for very long. The contraction in public spending when it comes will be severe - the hike in tax rates equally bitter. The recovery when it comes will be shallower than predicted.

Commercial property prices in the UK fell by 3.5% in January after a 27% fall in 2008.1600 smaller property firms with £1.1 billion of assets are expected to face liquidation this year.

Moody's forecasts corporate bond defaults will rise to 16.4% by 11/09 - the highest since the Great Depression and 3x the current rate.

Only 25%-30% of ex-Bush administration officials seeking full time employment have succeeded.