Almost exactly a year after the advent of the credit debacle, the term “credit crunch” squeezed into Britain's Chambers dictionary, defined as “a sudden and drastic reduction in the availability of credit”. Fittingly, the past week witnessed market participants focusing anew on deteriorating global growth prospects, arguing that slower growth could reduce inflation pressures.

The notion that the US was further along the slowdown process than foreign economies, and an expectation that interest rate differentials could narrow in favor of the US dollar, resulted in continued strength in the greenback, further weakness in commodities, lower bond yields and mixed stock markets.

Investors should brace themselves for a lengthy convalescence period, where a shift in central bank policy to targeting GDP growth rather than inflation is part of the patient’s eventual recuperation. However, in the short term I still give the nascent stock market rallies the benefit of the doubt provided the mid-July lows are sustained.

That's the way it looks from Cape Town.