Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market, If Only We Could Ignore Europe

Stock-Markets / Stock Markets 2011 Oct 22, 2011 - 12:51 PM GMT

By: Sy_Harding

Stock-Markets

U.S. Treasury Secretary Geithner says the debt crisis in Europe is Europe’s problem, and Europe has the means to resolve it if its governments would stop squabbling among themselves and take action. That seems to be the opinion globally, including among eurozone countries themselves.


But when it comes to getting beyond the generalities and rhetoric, the individual euro-zone countries cannot seem to overcome their self-interests and rise to the task. For 18 months now their debt crisis has been worsening and spreading while officials only apply bandaids that soon peel off. Each time, assurances are made that new talks are underway and substantial measures will be announced soon that will provide a long-term solution. Yet month after month, euro-zone officials do little more than provide still more assurances that they will announce something big ‘next week.’ And next week never arrives.

It has provided for extremely unusual week-to-week market volatility.

Their latest vows were that last weekend would produce the promised action. That pledge was then kicked down the road to this weekend, and the latest word from Europe on Friday was not to count on that either - but an agreement should be reached by next Wednesday.

The difficulty in maintaining confidence under such conditions can be seen in the action of global stock markets, including that of the U.S., and the sagging consumer and business confidence in Europe and the rest of the world.

The sad part is that there are indications that the U.S. economic slowdown may have bottomed, and a nascent recovery may be underway. But its potential may be gut-shot by Europe if Europe does not act in a believable manner to solve its debt problems, and instead brings economic disaster to the world by failing to do so.

Yes, for the first time this year, the trend of U.S. economic reports is potentially beginning to turn positive.

Just in the last two weeks we’ve learned that U.S. industrial production edged up 0.2% in September. There were 103,000 new jobs created in September, much better than forecasts of only 60,000. Auto sales picked up in September, coming in at the high end of analysts’ forecasts. Retail sales were up 1.1% in September, the biggest increase since February. New housing starts jumped 15% in September to a 17-month high. The Fed’s Philadelphia Manufacturing Index jumped from minus 17.5 in September to plus 8.7 in October, much better than economists’ forecasts. It was the first positive reading in three months. The new orders portion of the report rose to plus 7.8 in October from negative 11.3 in September. The Philly index is closely watched as a frequent bellwether for the national ISM index.

Meanwhile, third quarter earnings reports so far, while not fantastic, are coming in strong enough to provide optimism, considering the sharp decline in economic growth this year. Bloomberg reported Thursday that of 126 S&P 500 companies that have reported so far, 73% reported earnings that were higher than the same period last year.

Concern about the U.S. economy, the world’s largest, potentially declining further into a recession has been a major drag not only on the U.S. stock market, but on global markets and confidence.

So the recent indications that the economic slowdown in the U.S. may have bottomed is a substantial potential positive for global confidence.

If only investors and analysts could ignore what is going on in Europe. If only what comes out of the important EU summit over this weekend does not plow under the seeds of hope that are now sprouting in the U.S. economy.

After being bearish all summer I like what I see in the technical charts of many markets.

But Europe has global markets and economies at a critical juncture, with their decisions next week more important than any they have made in the last 18 months.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

© 2011 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in