Risk, anyone?

Despite continued risk aversion, Wachovia global economist Jay Bryson wonders when risk will come back into the market.

“We are not at that point yet and I wouldn’t want to catch the falling knife,” he says. However, “[when] we get a sense we aren’t falling as fast, there could be opportunities.”

The British pound, which has gotten hammered in recent months and has been flirting with parity vs. the Euro, might see a turning point late in the third quarter, according to Bryson.

“It could be a potential opportunity to buy the pound vs. the yen,” he says, adding that traders should watch for signs of stabilization or movement toward a bottom of the economic problems in Britain or the U.S.

He called selling in the pound an “overreach” as the pound/yen hit its lowest level since exchange rates began to float in 1973.

“The disinflation issue is something that will be with us as long as you have people losing their jobs,” Basile says. “If your paycheck is shrinking you will be much more selective about what you spend your money on, and companies will have to be more competitive about how to get your business.”