Europe’s toughest hour since WWII
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Europe’s toughest hour since WWII
Europe is now facing its “toughest hour since World War II.” That sounds like Churchill, but it’s a quote from German Chancellor Angela Merkel. She told members of her ruling party today that Europe needs a closer political union for it to climb out of its financial crisis. And what she doesn’t want to do is kick some countries out of the eurozone. By “some countries,” Greece and Italy come to mind. Today, let’s also add Spain, where the yield on the Spanish 10-year note rose above 6 percent. That’s not as bad as Italy’s, but still dangerously high.
We talked with Brian Gendreau, a market strategist with Cetera Financial, about whether market players in the U.S. have justification for their morbid fascination with Europe. He says yes, if Europe goes into recession, U.S. businesses will take a hit. Many large U.S. corporations get more than half their revenue from abroad and a lot of that is still from Europe. But, Gendreau says stock markets have done pretty well historically in periods of slow growth. In fact, the corporate sector has already been a bright spot in this recovery. Gendreau says businesses are slow to hire in tough times, but revenue losses can be off-set by savings on wages. Look at the strong third quarter earnings reports from nearly all of the S&P 500 index companies.
Also on the show, Macy’s Atlanta Christmas tree has broken in two. That could be bad news for the economy. Every year the department store puts up a 60-foot tree on its downtown Atlanta store. And in the past 63 years, it’s only broken once before: In 2004. You may recall the mid-2000s as boom years for the U.S. economy, but in fact, from 2005 on, we suffered five straight years of falling growth. So maybe that snapping sound wasn’t a tree. Maybe it was us! And that means a drop in the Marketplace Daily Pulse today.
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