In fact, its pathetic management of the debt dramas on the continent explains why 22 out of 22 economists in the Bloomberg survey said that interest rates will not change today here in Australia.
By the way, for those stressing about the possibility of a Euro-inspired credit crunch, like the one we saw before Lehman Brothers collapsed, economists Michael Knox and Marcel Von Pfyffer from RBS Morgans say there are no parallel signs this kind of storm is brewing right now.
Over in Europe, the Stoxx Europe 600 Index put on 0.3 per cent while the Standard & Poor’s/TSX Composite Index climbed 0.8 per cent.
Growth in Canada
On the good news global front, Canada’s economy grew at the fastest pace since 1999 in the first quarter led by consumer spending and manufacturing.
As Bloomberg pointed out:
“Developing nations remain ‘a source of strength for the world economy,' European Central Bank President Jean-Claude Trichet said today via video link to a Bank of Korea conference.”
These positives cannot be lost when the headlines are sidetracked by the negatives, especially out of Europe. You must remember that the two big economies of Europe — Germany and France — are fairly stable and will benefit from the devaluation of the euro.
A holiday in Paris or Berlin is a lot cheaper now than one in New York and that will help the European economy.
In another positive sign, oil rose to over US$74 a barrel, which is always a sign that the economic outlook is improving.
“Over the next one-two months, a relatively resilient economic and profit outlook should push riskier assets up,” Jan Loeys, a London-based strategist at JPMorgan Chase & Co., wrote in a report e-mailed today (Bloomberg). “Confidence surveys remain strong and lower interest rates, oil prices and a cheaper euro are providing positive feedback from the market correction.”
As you can see there are still plenty of reasons and plenty of people who believe it will pay to remain cautiously positive despite the negatives and naysayers out there.
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