Courtesy of John Nyaradi.
Post summit euphoria is long forgotten as Europe’s crisis rolls on
It was an ugly day in Europe as last week’s summit in Brussels is now a dim memory and old problems resurface.
Here are the day’s high (low) lights:
1. Mario Draghi and the European Central Bank cut their benchmark lending rate to record low.
2. Mario Draghi lowers deposit rate to 0%.
3. Mario Draghi warns on downside risks, effectiveness of rate cuts.
4. Bank of England guns up more quantitative easing to fight recession in Great Britain.
5. Eurodollar falls to $123.91, lowest since early June.
6. Yields on Spanish and Italian 10 year bonds spiked higher towards unsustainable 7% level.
7. European Union unemployment is at a record high 11%.
8. Europe Union Composite came in at 46.1 for June, indicating contraction while the Business Activity Index logged 47.1, confirming an ongoing downtrend.
9. Recession is spreading across Europe with Spain, Britain, Denmark Czech Republic, Portugal, Italy, Greece and Ireland among the most notable countries with contracting economies.
Europe ETF Wrap Up:
CurrencyShares EuroTrust (NYSEARCA:FXE) -1.8%
ProShares Ultra Short euro (NYSEARCA:EUO) +3.5%
ProShares Short MSCI EAFE (NYSEARCA:EFZ) +1.5%
iShares MSCI Germany Index (NYSEARCA:EWG) -2.3%
iShares Europe 350 (NYSEARCA:IEV) -2.4%
Bottom line: The European debt crisis is far from over as worries resurface over Spain, Italy and Greece and recession spreads across the Continent. Since the European Union, in aggregate, is the world’s largest economy and the biggest trading partner of the United States, this can only sound warning bells for the future of the U.S. economy and financial markets.
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