The imminent end of the Fed's quantitative easing as well as news that Standards & Poorís had downgraded the outlook for Italy's ratings to negative were behind the stock selloff in Europe in morning trade, analysts told CNBC.com Monday.
It seems that with the German manufacturing index down, people are worried that the strongest country of the EU is not recovering and this may not bode well for the other countries of the EU. If their economies are not recovering it will make it all the harder to bail-out the debt of the PIGS. UK's inflation is up (about 3.4%?) With inflation up and wages not up that is hard on consumers.
Clippings from brefing.com [edited]
8:35 AM S&P futures vs fair value: -15.20. Nasdaq futures vs fair value: -29.10. Disappointing data from the eurozone has the region's bourses under sharp pressure. Germany's DAX is down 2.0%. The country's Manufacturing PMI for May fell to 58.2 from 62.0 in the prior month while its Services PMI fell to 54.9 for May from 56.8 in April. Banking plays Deutsche Bank (DB) and Commerzbank have been among the heaviest drags on trade. FTSE is off by 1.7%. The natural resource plays are suffering some of the sharpest declines. Italy's debt rating outlook was downgraded by analysts at S&P during the weekend. Greece's Athex 20 has given up 0.7% after its debt was downgraded by analysts at Fitch.
9:05 AM S&P futures vs fair value: -15.70. Nasdaq futures vs fair value: -29.30. Strength in the dollar, which was last quoted with a 0.8% gain against a basket of major foreign currencies, has put pressure on many commodities. In turn, the CRB Commodity Index is down 1.3%. Crude oil is under some of the most pressure -- it is down 3.1% to $97.00 per barrel in the first few minutes of pit trade. Silver prices have fallen 1.2% to $34.68 per ounce.
Even our own markets are propped up on Red Bull via the QE.
Once QE is over and the cheap money is gone, those with all these piles of cash will continue to sit on the sidelines until the Congress/President gets their collective **** together and gives people confidence that we're not going to end up bankrupt in 10 years.
Europe is facing the same challenges, just on a larger scale and earlier.
Mark my words, if the idiot that calls himself Bernanke doesn't continue the madness with a QE3, without any consumer spending to keep companies and revenues afloat, the market will crash worse than if we'd have done nothing.
How on Earth are these companies going to find earnings when the corporate money isn't flowing, and the consumer/labor markets have no money to spend?
If we don't see some job growth soon, Bernanke and crew might have just painted us into a corner and FORCED a round 3....otheriwise it could be baaaadddddddd.