The situation was hardly made any better by the publication of the Federal Reserve’s latest Beige Book. A bit like the Bank of England’s quarterly inflation report, also published this week, this gives the view point of the central bank on the US economy Officially, it is a summary of regional economic conditions But it gives an overview of how America really is faring. And it was not pretty reading.With retail sales beginning to tail off, it seems the American economy has ground to a halt. But, as in Britain, there remains a significant demand for housing and for home loans. People still look to bricks and mortar at times of uncertainty, and that is what we have in abundance at present.Germany has been warning that estimates on economic growth for this year have almost certainly been too optimistic.

Chancellor Gerhard Schr? agreed the slowing in the world economy means 2 per cent growth in 2001 will be hard, but not impossible, to achieve. Still, at least inflation is looking less of a problem with the headline figure falling by a full one percentage point in GermanyWhat does all this mean in market terms? Certainly, the speed at which earlier gains were handed back this week shows how nervous investors are. August is not a good time to take the temperature of the market, because trading volumes tend to be slim. They are not being made more robust this year by private investors, still shy of getting back into the equity market.

In the US ,there is now more than $2,000bn sitting in money market funds. In London one private client broker with an exclusively advisory client bank (the sort that tend to ebb and flow with market conditions) said he had not dealt for his clients for more than two months.But just as it would have been wrong to become too optimistic a week ago when the bounce was underway, so we should not read too much into this week’s more difficult conditions. The fall in markets is more a reflection of the current news flow than any real change to the likely outturn for economies. Markets in general, and individual shares in particular, tend to overshoot in both directions, the more so now that we have greater volatility. The sheer weight of money overhanging the market suggests that the turn, when it comes, will happen with great rapidity.The two imponderables are the extent of the economic slowdown and the length that it lasts.

It is beginning to look as if hopes for a bottom being reached during the second quarter of this year were premature and that we may now have to look into 2002 before we can see signs of a pick-up in economic activity. But the action taken by the central banks should be enough to restore stability before too long.It is just that sometimes it does not feel as though things will ever get better They will, though. Trust me – I’m a stockbroker.Brian Tora is chairman of the Gerrard Asset Allocation Committee. Remortgaging to find a cheaper deal has become one of the hot topics of the summer, as canny borrowers switch from one lender to another to take advantage of special rates. But many borrowers are now wise to this strategy, and the resulting large remortgage volumes are causing lenders headaches.