“Does this mean I am safer being in an Overseas fund or will this affect all markets?”

I am asking that same question myself and people much much smarter than me are also asking that question. Is the world decoupled from the US Consumer?? Peter Schiff seems to think so, I’m not so sure. Here are some quotes from an Australian article

“You’ve got weakening US jobs numbers keeping the US dollar well under pressure,” RBC Capital Markets senior currency strategist Sue Trinh said. “But the Aussie dollar is not able to derive the full benefit of that with the market also equally concerned about global growth implication from the US economy slowing.”

Ms Trinh said the dollar was still beholden to the view that a slowdown in US growth would have a significant impact on global growth, despite the tightening biases of both the Australian and European central banks.

“At the moment there is a camp that is of the belief that the global economy can decouple from the US slowing,” she said.

“Certainly that’s the rhetoric that we’ve seen from the ECB and to a degree the RBA have maintained a reasonably cautious outlook on that.”

But ANZ senior interest rate strategist Sally Auld said the Australian dollar’s failure to push back above US90c was indicative of a much broader weakening in the global economy.

The unit hit a 23-year high of US94c in November, following a recovery from its sharp descent during the breakout of the August US sub-prime mortgage crisis.

However, Ms Auld doesn’t believe the currency is likely to break above US90c in the near term.

“It’s been a slow grind lower for the last six weeks or so,” she said. “The Aussie dollar is renowned in a big-picture way for being one of the better global leading indicators, so it could be telling us quite a powerful story about how this is all going to play out.”

Personally I am making my way to the deflation camp. I don’t think the world is that decoupled from the US and I do think this is going to be a significant recession.