Asian shares closed in the red today, European indexes are following suit. Most likely our North American markets will open down. Here comes another day (week?) of worries about the European bailout package. Is the 1 trillion enough or not enough? According to the German chancellor, it only buys time and it’s up to each country to reform its economy and reduce its deficits.
Economic data has been encouraging but the recovery remains weak and any aggressive austerity measures might derail it. This is what investors are worried about. This might result in a market correction of 5-10% from this year’s highs and a new all time low for the Euro.
So in 2008 all the talk was about spending our way out of the recession and in 2010 the talk seems to be cutting the expenses, fiscal austerity or else we go back into the recession. How things change. You know it’s not the European debt woes that worry me really, its China that does. Sooner or later China will have to reign in its economy since there is more and more talk about inflation and asset bubbles. When traders start worrying about China, you can be sure it will be another 5-10% correction.
I am currently fully invested. All of my energy stocks are in the red. These stocks will pay back in the near future, I do not mind waiting on them until the autumn (that is if china worries don’t kick in by then). Energy prices will be coming under increasing pressure every time the Euro falls versus the USD. I am hoping it’s my Silver stocks that will balance out the losses.
How about you dear Reader, what’s your opinion on the current events?