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Investors Wary of Bank Gloom

Investors are anxiously awaiting first-quarter results this week from four of America's biggest investment banks, which will provide an indicator on the general health of the economy.

Some economists warn that the US economy is on a knife-edge. 'We are at a tipping point where we could go into recession or veer away and go back to growth,' said Anirvan Banerji, research director at the Economic Cycle Research Institute, which has predicted correctly the past several recessions. 'Everything depends on what happens in the next few weeks. It really is that critical.'

Banerji said that if oil prices rose, or the expected war in the Gulf dragged on, the US could be tipped into its second recession and that would extend the bear market and kill any hope of a profit recovery on Wall Street.

[O]ptimists say that if there is swift resolution in Iraq the economy - and the profits at the merchant banks - could recover smartly.