For those out there in pundit land who predicted a “pullback” in the market, well, let me give credit where credit is due. It appears we had one, and unless the news out of Europe goes back to the dark side, and it might with elections coming June 7th in Greece, we just might have seen the worst of it.
More than $1 trillion was erased from U.S. market value this month amid concern about Europe’s debt crisis.
Of course, one never knows what the market will do, but looking at the current world set up, even Greece isn’t so scary anymore. Global banks have had time to prepare for a bankrupt Greece, which means the market is baking that into the cake. Me thinks, though, this is not how it will go. Greece will fall back in line and remain in the EU. Current polls in Greece point to a change of heart among the Greek people – they now favor the “pro-bailout” candidates. As well, the EU does not want to see Greece go.
World leaders backed keeping Greece in the euro zone on Saturday and vowed to take all steps necessary to combat financial turmoil while revitalizing a global economy increasingly threatened by Europe’s debt crisis.
As to the other European issue of economic stimulation or austerity, that mood is now changing as well. It seems even Germany understands that cutting budgets excessively will not lead to economic resurgence. Although the budget cutting that happened was and is absolutely necessary, Hollande’s election in France sent a powerful message – it is time to stimulate.
A summit of the G8 leading industrialized nations came down solidly in favor of a push to balance European austerity with economic stimulation.
The other issue out there is China, and that too is working toward a favorable position in the heart of the market. As I have been saying all along, the Chinese have a plan, and it is working.
Chinese Premier Wen Jiabao’s pledge to focus more on bolstering growth spurred speculation the government will step up efforts to combat a slowdown.
So where does all this rumination on my part leave us? I think it leaves us sitting in a solid position to look for opportunity. The sputtering global economies are still moving forward and as confidence in Europe is restored, a certain economic synergy will kick in. Specifically, though, one sign of a healthier economy, and one spot to look for opportunity, is the financial sector. In this last round of selling in the market, the financial sector took a hit. Take a look. You just might see somewhere to put your money to work. Hey, that sounds familiar.
Through the first 20 weeks of 2012, 24 banks with a combined $6.65 billion in assets have failed. That compares to 43 banks with a combined $18.77 billion in assets that failed in the first twenty weeks of 2011. In other words, the number of bank failures is down about 45 percent so far in 2012, and the typical bank failing thus far this year is much smaller than the typical bank that failed in 2011.
Trade in the day; Invest in your life …
