 |
| Stock market of Brussels (Photo credit: Wikipedia) |
No doubt that was criticized last week for Wall Street. Our Stock Tips radar detected a number of factors that explain the plight of the stock market. Thoughts about the situation in Europe deteriorated with each passing day and its impact on thoughts about the American economy more than initially planned.
There has been no shortage of bad signs in the market this week. The Morningstar U.S. Indexdropped about 5% to the lowest level in four months. Investors seeking safety rushed into Treasury bonds, sending yields to near-record-low levels. And it isn’t concern over Facebook’s (FB) ability to monetize mobile users that is sending global investors to safe havens. It’s Greece and the worry that a forced exit from the eurozone would have on the rest of Europe. This fear isn’t misplaced. There is a very real chance that Greece will need to leave the eurozone, sending further ripples from Greece and upsetting the global financial pot.
Why Now?Greece’s economy hasn’t suddenly become weaker during the last few weeks; it’s been in a deep recession for years. The key problem is political. In order to keep the aid from the rest of Europe flowing, Greece needs a government that is credibly able to agree to the austerity measures that Germany and the European Central bank are demanding. But it doesn’t seem that a stable government is going to appear anytime soon. Elections from a couple of weeks ago were inconclusive and followed the recent European trend of rejecting incumbents and, more broadly, austerity. A fresh Greek vote is scheduled for June, and no one knows who (if anyone) will emerge with the power to form a governing coalition in parliament... Continue to read.
No comments:
Post a Comment