Thursday, February 23, 2012
Stock Market Commentary:
Stagflation in Europe Weighs On Markets; U.S. Economic Data Tops Estimates
Before Thursday’s open, a report was released that forecasts the 27-nations in the European Union, which are responsible for a fifth of the global economy, to experience stagflation in 2012. Stagflation is a situation in which one’s economy is stagnate, if not contracts, coupled with high unemployment and higher inflation. The report expects the euro-zone to fall into a recession in 2012 which would be the first time the EU was in a recession since the Great recession in 2009. Economic data in the U.S. continued to be positive. The Labor Department said weekly jobless claims were unchanged at 351,000 which beat the Street’s estimate for a slight gain to 354,000. Needless to say, this bodes well for both the U.S. and global economy.
Market Outlook- Confirmed Rally
Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December and are extended by any normal measure. All this means is that the odds for a pullback increase. However, markets can very easily go from overbought to extremely overbought. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!