Day: April 18, 2013

Apr

2013

What Are European Markets Telling Us About the State of the EU Crisis?

If you happened to simply glance over the headlines in the financial media over the last few months, you’d think the European Crisis was over.

In November, no less than France’s Prime Minister, Spain’s Prime Minister, and even Germany’s Finance Minister suggested that the worst is over for the Euro Crisis or that the Crisis as a whole was over completely.

Unfortunately for them, the markets don’t seem to agree. Indeed, EU markets have all topped or are in the process of topping and forming downtrends.

Italy stopped being in an uptrend months ago and is now in danger of taking out major support:

The same goes for Spain’s Ibex:

Even Germany’s stock market, the DAX, is breaking down in a big way.

What gives? Isn’t Europe doing great? Didn’t Mario Draghi promise to do everything he could to save the Euro?

Obviously European financials didn’t get the memo.

In the end, a Central Banker’s promise doesn’t have the binding power to hold together a $46 trillion banking system together… especially when that banking system is leveraged at 26 to 1.

Investors take note, the markets are sending multiple signals that things are not going well in the world. Europe’s markets are forecasting a nasty summer.

I’ve been warning subscribers of my Private Wealth Advisory that we were heading for a dark period in the markets. I’ve outlined precisely how this will play out as well as which investments will profit from another bout of Deflation.

As I write this, all of them are SOARING.

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Best Regards,

Graham Summers

Apr

2013

Germany Just Took Out Its “Recovery” Trendline

More signs of trouble.

We’ve been told countless times that Europe was “fixed.” The problem with this is that the market is beginning to realize this is not true.

Much of the European recovery counts on Germany. The ECB owns the printing presses… but without Germany’s support, the Euro is done for.

However Germans are only going to be supportive of the Euro up to a point. That point is when the German economy contracts enough that Germany has its own problems to deal with, rather than focusing on Europe’s.

That point appears to be approaching. Germany’s economy contracted in the fourth quarter of 2012. The country has since seen its credit rating downgraded to A from A+ by Egan Jones.

The German stock market, the DAX, has officially taken out its trendline from the June 2012 low when European Central Bank President Mario Draghi promised “unlimited bond buying” to support Europe.

This is bad news for the rest of Europe. With Angela Merkel seeking re-election in September this year, Germany will be less likely to OK any more bailouts.

Europe better pray nothing goes wrong between now and then.

Watch the DAX and the Spanish Ibex. Spain as noted in Monday’s market commentary is the European canary in the coalmine. If it starts to drop… and the German DAX follows… then the contagion is back.

Investors take note, the markets are sending multiple signals that things are not going well in the world.