It doesn’t look good this morning.
The S&P 500 futures are pointing to a down open in New York. The euro is down further against the dollar in trading in Europe, hitting $1.2935, a 13-month low. European stock markets are down as well with London dropping almost 1% and Paris a little more than 1%. Selling isn’t limited to Europe either. Overnight Hong Kong was down more than 2%. Shanghai, however, bucked the trend and rose slightly.
Europe—and in particular Greece and Spain—remain the epicenter of the shock waves driving down stocks around the world.
One fear is that protests in Greece or political difficulties in selling the $146 billion bailout to German voters will still scupper the European Union/IMF rescue plan.
And public statements from Spanish Prime Minister Jose Luis Rodriguez Zapatero yesterday just fueled fears that Spain is next. Trying to squash rumors that he was in Brussels negotiating a $360 billion bailout with the IMF (International Monetary Fund), Zapatero just succeeded in demonstrating that Spain still doesn’t have credible financial leadership. Rumors of an IMF bailout are “complete insanity,” Zapatero said. It was “simply intolerable,” he told reporters, that such rumors were circulating to the detriment of Spain’s standing in the financial markets.
That, of course, completely ignores the financial markets’ increasing belief that Zapatero doesn’t have a clue about the size of the Spanish debt problem or any plan for preventing the Spanish debt problem from becoming the Spanish debt crisis.
On the other hand, purely economic data from the United States released over the last two days signals a solid, if not stunningly robust, recovery in that economy.
More on that in my next post in about an hour.