Negative moods in Europe are finally being calmed by news on Wednesday that the European Central Bank will likely lend less money than expected for the next three months. The data suggests that region's banks' cash needs were wildly overblown again by the crisis fear-mongers.
"The result of the ECB's money market operations indicated that money markets have been less distorted than originally feared," BNP Paribas said in a note. BNP Paribas is considered the leading financial group of the eurozone.
Also providing a hopeful sign, Germany's unemployment rate declined to 7.5% in June thanks not only to the traditional springtime upturn, but also an improving economy, according to the country's labor agency report. They released data showing that the jobless rate was down from 7.7% in May.
The German data raised hopes on Wednesday that consumer spending in Europe's biggest economy will help the region, a zone where doomsters have suggested that severe spending cuts will darken the growth outlook.
The European reality now mirrors what most analysts now recognize in the U.S. economic prognostications. "The U.S. economy has stabilized in the near term," said Castor Pang, director of research at Cinda International. "Maybe the U.S. markets are overreacting a little."
Wednesday, June 30, 2010
European Cash Needs Overblown
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Is the Political and Financial Markets Commentator a worthy entry in this blog? Take a look at today's (and just about every other day's) comments. He and Paul Krugman should write a blog together since they both seem to think we're about to enter into another depression.
ReplyDeleteEldon,
ReplyDeleteDo you think the risk of a double-dip recession is greater given all the negativity out there?
The overall picture isn’t so much of a double-dip recession as it is of a badly wounded economy in 2009, now starting its recovery... the most positive news today is if you subtract all the government hiring/firing of census workers, we still have a solid reading of the private sector alone: net new jobs up 83,000.
ReplyDeleteBottom line as we have said here since April of last year, strength in the manufacturing sector has been central and will continue to be in this economic recovery. On that front orders continue to move into backlogs. Production remains very strong and because of that manufacturing hiring continues to grow at a strong clip.
Thanks for your level-headed response. I wish there were more folks like you on CNBC! Do you think it's still possible that we'll have a positive year for the markets?
ReplyDelete