The rise of the Internet has created an abundance of easily assessable economic information, making it difficult for investors to understand, digest, and even evaluate what’s going on. Where, then, can investors turn for objective economic analysis, market research, and breaking fiscal news that affects both Wall Street and Main Street?
Economic analysis means looking at the interconnected effects of global events. These events can be major, such as geopolitical tensions, elections, corporate earnings, housing markets, consumer sentiment, and rising unemployment rates, or seemingly innocuous news stories, including mergers and acquisitions, crude oil inventories, auto loans, birth rates, and retiring Baby Boomers.
When the U.S. economy was on the verge of collapse after the financial crisis of 2008, the Federal Reserve came to the rescue. The central bank provided the financial system with quantitative easing—it printed money and bought bad debt from the big banks. As a result, the Federal Reserve’s balance sheet has ballooned to $3.0 trillion; and continues to grow.
The eurozone is struggling to get out of a debt crisis that has been helping weigh down the global economy. Germany and France, the go-to countries for growth and stability in the eurozone, are beginning to feel the impact of the region’s economic strain. And may not be able to support the region and prevent it from slipping into a recession.
What does this mean for the eurozone? How will it impact the United States?
The global economy is in a state of eternal flux. Because global economies are interconnected and interdependent, geography is no longer a barrier to economic growth or failure. And why it’s essential to understand the global picture when looking at the U.S. economy.
China, the information age, an end to the 30-year down cycle in interest rates, the credit crisis, the debt crisis in America, the eurozone crisis, tensions in the Middle East…these are only a few of the events affecting the U.S. economy.
That’s also why in-depth macroeconomic and microeconomic analysis is more important than ever. It helps investors see the world from different perspectives and helps uncover opportunities to balance, diversify, and grow stock portfolios.
What the Greece Crisis Means for the Eurozone
The Greece crisis is akin to a friend who can't manage their spending and is always in need of cash. The debt-ridden country known for its beaches, olives, and antiquities just doesn't seem to get it. After a bailout program that saw about $265 billion flow into the dried up coffers in Greece back in 2010, the country is really nowhere near surfacing out of its financial crisis. The country was predicted to rebound out of its recession in 2012. This never happened. Greece only recently emerged from its recession, but this is expected to be short-lived; the country will likely falter back into a recession this year. To make matters worse, the country cannot repay its loans. Greece is demanding to revamp the requirements o ... Read More
Europe the Best Short-Term Investment Opportunity Outside the U.S.?
Regular readers of mine will know that I used to be bullish on China; I thought the Chinese economy offered a good contrarian investment opportunity. Now, I’m turning my sights to the eurozone for the top potential investment opportunity outside the U.S. Here’s why...
Chinese Economy in 2015 Losing SteamYou don't have to be behind the Great Wall of China to realize there are deeper issues brewing in the country of 1.3 billion people. Since assuming the role of the second-largest economy in the world, China’s economy has been caught in a downdraft, with weaker gross domestic product (GDP) growth and broad stalling across the board. There must be something about ... Read More
Investor Beware: NASDAQ Passes 5,000, but Market Correction Looms
The NASDAQ may have passed 5,000, but investors shouldn’t get caught up in the excitement. A market correction may just be on the horizon, especially when you consider factors affecting the global economy.
NASDAQ, Stock Markets Near Highs, but Bull Market SlowingAfter the NASDAQ’s recent breach of the psychological 5,000 level, there was talk about a move to another record at above 5,104, last encountered 15 years ago. At that time, in 2000, for the stock market, it was both a period of excessive greed and jubilation. After the recent records by the DOW and S&P 500, I fully expect some pausing in the stock market. We are beginning to see that. Following a strong February, the major stock marke ... Read More
Three ETFs to Profit from Europe’s Economic Recovery
Eurozone Still Messy, but Economic Recovery Has BegunEurope is open for business. Well, kind of. The region—namely the 19-country eurozone—has recently been in the news with the Greece fiasco and its potential exit. Greece now has a four-month reprieve in the form of an extension to its current bailout loans and terms, but the distressed country still has to convince eurozone finance ministers that its revised bailout plan for austerity measures makes sense. For the time being, we are seeing some progress in the eurozone that points to growth. I had been worried about the negative impact from the Russian mess, but so far, it appears to be a non-issue. In the end, Germany, the s ... Read More
Top Two ETFs for When Interest Rates Increase, Investor Sentiment Plummets
This past weekend, a friend of mine made a statement that there must be a large amount of economic growth coming shortly because of the booming stock market, driven by investor sentiment. As I told him, the two are not necessarily tied together. Over the past few months, we have heard about how economic growth is about to accelerate here in America, and this has helped drive investor sentiment in the stock market higher. However, I think there are many questions that need to be answered before we can assume economic growth will reach escape velocity, and investor sentiment is heavily contaminated with a large addictio ... Read More
Greece and Eurozone to Fall Into Economic Turmoil? How to Profit
There is yet another Greek tragedy playing out across the Atlantic, where legendary poets, mathematicians, scientists, and thinkers once roamed. Fast-forward several thousand years and the country once known for its proud history is cracking at its foundation, burdened by tens of billions in debt and fiscal chaos. (There is a way investors can profit from Greece’s potential demise, but more on that later…)
Syriza Party to Negatively Change Economic Outlook in Eurozone?Making the situation even more uncertain for this poor cousin in the 19-country eurozone is the recent transformation in power with the left-wing Syriza party, under Prime Minister ... Read More
ECB’s Money Printing a Profitable Opportunity for U.S. Investors?
The money printing presses may be dry in the U.S., but they are just being inked up across the Atlantic in the eurozone, where they’re beginning to print easy money in the form of euros. While there are both pros and cons to this move, there is the potential for American investors to profit. Recall how the Federal Reserve’s three rounds of quantitative easing (QE1, QE2, and QE3) over the past six years helped the stock market and economy. Of course, there are the negatives with the booming $18.0-trillion national debt.
ECB Introduces Easy Money Printing ProgramLooking to avoid a hard landing, so to speak, the European Central Bank (ECB) did just as it was expected to do ... Read More
Declining Commodity Prices Ahead with Weak Global Economy
Oil may be holding above $40.00 per barrel, but investors shouldn’t get too comfortable. The chart foreshadows oil prices could falter and maybe even drop below $40.00. It’s true that speculation has influenced the direction of oil to some degree, but much of the negative sentiment has to do with a declining global economy that shows some despair. And while gross domestic product (GDP) growth in the U.S. is pretty decent, what we are witnessing in the global economy cannot be saved by what is happening domestically. That suggests weaker oil prices ahead—along with weaker commodity prices overall.