The market felt compelled yesterday to respond to the “talk” coming out of Europe, and around the globe for that matter. Apparently, the market likes the European chatter about economic stimulation.
Talk that some form of EU action could emerge did ease tensions in the European debt markets, with Spanish and Italian government bond yields falling.
“EU action” means economic stimulation. Oh, and imagine that, Spanish and Italian bond yields falling. It seems as if it were just a couple of weeks ago, doom and gloom surrounded the rise in yields. My oh my, how some things can change quickly. Maybe not so quickly on the European debt front, but they are changing. The situation is evolving into the next and necessary phase, and it seems the movement is propelled by the people, the folks who now seem to be ahead of the politicians in righting Europe.
Support for Germany’s opposition Social Democrats (SPD) has jumped since their victory in a regional election, a poll showed, highlighting the increased domestic pressure on Chancellor Angela Merkel as she battles the euro zone crisis.
Merkel must now understand she is rapidly losing support for her staunch support of austerity versus stimulation. Along with the loss of her conservative ally Sarkozy, she is losing her coalition in Germany, which means she will have to yield on her strong opposition to stimulation. She might also have to yield on one form of economic stimulation that is again rippling through the political circles – EU bonds. This action could propel the next step in the process of healing for the EU.
When the financial collapse hit in 2008, Britain was the first economic power to adopt austerity measures as a way to deal with the problem. It did not work out well for them. In fact, it made their economic problems worse, and today things have not improved dramatically.
Britain has not fully recovered from the slump caused by the 2007-2009 financial crisis, and the economy fell back into recession around the turn of the year.
Europe will reflect on this as the debate works its way to the forefront of European politics, and it will be hard for the ECB to ignore the actions England will now take to stimulate its economy.
UN nuclear agency chief says agreement reached with Tehran on Iran probe, to be signed soon.
It appears as if Tehran is seeing the light, and if this is so, if an agreement about investigating its nuclear facilities is signed, oil prices could drop further, and you know what I think about that – great for the global economy.
Fitch cut Japan’s sovereign credit status on Tuesday to the lowest level among global ratings agencies
Okay, should anyone even care what Fitch thinks about Japan, or anything for that matter? When will these folks just pack up their bags and leave us alone?
Trade in the day; Invest in your life
