It looks like today Germany will take away what Japan gave investors yesterday.

I think this just highlights how tough it is to value stocks right now. The global economy is slowing, but if we don’t know by how much, we’re just guessing at share prices.

Yesterday, August 15 global stock markets rallied when second quarter GDP in Japan fell by an annualized rate of 1.3% instead of the 2.5% decline economists had forecast.

Today an unexpected stall by the German economy has taken down European stock markets. The German DAX index was down almost 1.9% as of 11:30 a.m. in Europe. The French CAC 40 and the Spanish IBEX 35 indexes were each down 1.4%.

The problem is data released this morning showing that GDP in the 17-country EuroZone rose by just 0.2% in the second quarter. Read more

Why isn’t anyone intervening in the Italian and Spanish debt crisis?

Danger, danger, danger.

Everyone agrees that a 6% yield on a EuroZone country’s 10-year government debt is unsustainable, and that’s it’s a clear sign that a country is headed down the rescue-package route so recently traveled by Greece, for a second time.

On August 2 10-year bond yields for Spanish debt hit a high of 6.42%. For Italy 10-year yields climbed to a high of 6.25%

And the policy response from the EuroZone’s political and financial leaders? The selloff of Spanish and Italian bonds is “clearly unwarranted on the basis of economic and budgetary fundamentals,” European Commission President Jose Barroso said in an e-mailed statement that day.

Good luck stopping the bull bears with that weapon.

Yesterday, August 3, Italy and Spanish bonds got a bit of a breather—no thanks to anybody in the EuroZone. The Swiss National Bank, trying desperately to keep the soaring Swiss franc from appreciating Swiss products out of the global market, cut its benchmark 3-month rate to 0%.

With that the yield on the Spanish 10-year bond retreated to 6.24% and the yield on the Italian 10-year fell to 6.07%. (Note that both are still above the 6% danger level.)

But don’t expect Spanish and Italian bond yields to head down significantly on either statements by EuroZone politicians or Swiss National Bank rate cuts.

And today’s announcement from the European Central Bank that it would resume buying Irish and Portuguese bonds—but doesn’t plan to intervene by buying Italian or Spanish bonds puts the EuroZone’s central bank on the sidelines. Bank president Jean-Claude Trichet curiously chose to note that even the decision to buy Irish and Portuguese government debt wasn’t unanimous. It’s easy to read those tealeaves—the bank is so politically divided that intervening in the Italian or Spanish crises is unlikely.

So any bond trader worth his or her Bloomberg knows that the weeks ahead present a clear opportunity to drive EuroZone bond prices down without fear of a significant response. I’d call this the Great Euro Bureaucracy Arbitrage. Read more

Sell Burlington Northern Santa Fe (BNI)

This one is very simple: Warren Buffett’s Berkshire Hathaway (BRK.A) is buying the Burlington Northern Santa Fe (BNI) railroad for $100 a share. Read more

Sell Accor (ACRFF.PK)

In a very controversial vote Accor’s (ACRFF.PK) board of directors voted on December 15 to split the company into two businesses. Accor Hospitality would focus on the company’s hotels and Accor Services would focus on voucher and pre-paid services. Activist shareholders Colony Capital and Eurazeo, which together hold 30% of the company’s shares, argued that splitting up the company would unlock value for shareholders. The French government, which holds 7.5% of shares, argued that it was risky at a time when it was still difficult to raise capital to split the company’s cash cow vouchers and services business from its capital hungry hotel division.

I think both sides have a point.

 It is risky to split up the two businesses for exactly the reason that the government investment fund noted. But a split might light a fire under the hotel division, which has been reluctant to give up a real-estate heavy business model in which it preferred to own hotels for the capital-light model adopted by other hotel chains. In that model hotel companies have sold real estate and rely on partners for investment in hotel properties while the hotel company concentrates on managing hotels on a fee basis.

 What concerns me isn’t so much the outcome of the vote but the erosion of good corporate governance at Accor. Read more

Sell Q Cells (QCLSF.PK)

Solar has become an impossible business—even if you are the largest independent producer of solar cells in the world—if you can’t get costs under control.

Q Cells (QCLSF.PK) is the midst of layoffs, write downs, and asset sales that are intended to fix what is now an uncompetitive cost structure. Read more