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The European Economy: Game Over -- OR -- Play Till It Wins?
Inside our new, August 2012 European Financial Forecast
By Nico Isaac
Fri, 27 Jul 2012 16:15:00 ET
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Europe's 2-year long economic Whac-A-Mole game continues. Central banks across the Continent use their giant "mallets" of bond buybacks, rate cuts, and bailouts to hit ONE crisis over the head -- only to have another one savagely pop up in the opposite corner.

  • Greece gets a 110 billion euro bailout, only for Spain to pop up in need of saving
  • The UK financial sector gets back on the growth track, only for JP Morgan to pop up with $5-plus billion in bad bets
  • One European bourse climbs back from the bearish edge, only for another one to careen right over it. 
So, will Europe's monetary authorities be able to "whack" all the reoccurring "moles" before their time runs out?
 
Well, the new, August 2012 European Financial Forecast has been keeping score all along AND can say with great confidence whether these obstacles are "mile markers in the Continent's march" toward recovery.
           
 
Could Negative Yields Be a Positive Sign? The December 2011 European Financial Forecast wrote, "Quantitative easing will now fail to stop" the next wave of stock and bond market declines. Now, the August EFF brings us up to speed: “Since then, the [European central banks] have embarked on 6 rounds of quantitative easing” YET, 2-year government yields in 6 European countries have turned NEGATIVE. So, is this a “contrary bullish sign”?
 
It helps to have a precedent. Our chart of Japanese government bonds vs. the Nikkei since 1988 reveals whether negative yields emerged at major stock market bottoms.
 
A Meaningful Elliott Wave Analog: The only thing better than a clear Elliott wave pattern, is a clear pattern that repeats itself over again. Our 4-paneled chart of the DAX, CAC 40, FTSE 100, and Euro Stoxx 50 does just that. We write:
 
“The classic [wave structure] since mid-March mirrors the larger degree wave [structure] since late 2011… which mirrors an even larger degree wave structure since 2007.”
 
This analog increases the “potential” for an across-the-board move in the “coming months.”
 
Dirty Linen in London: Over the last few months, London has been racked by more scandal than Lady Gaga: See: JP Morgan’s near $6-billion bad bet bombshell to Libor-gate. Why now? Well, our chart of the FTSE 100 since 1998 -- alongside the biggest cases of financial and political corruption over that time -- sends a loud & clear message:
           
“Uncovering malfeasance” is a “well-documented” indicator that social mood (and thereby stocks) have turned a meaningful corner.
 
Whether that corner leads to a brand-new uptrend might surprise you.
 
A Strong Case for 1 Kind of Euro Move: There are 2 key details to take away from our chart of dollars per euro versus the Daily Sentiment Index of euro bulls since 2010:
 
  • The wave structure of the decline since February 2012 displays a very clear count
  • The DSI of euro bulls is at/near a level reached 5 times in the last 2 years -- each time preceding one kind of price move. 
Short Selling Ban-d Aid: After Italy's MIB and Spain’s' IBEX index’s 2-week, 12% plunge in July regulators swooped in with a temporary ban on short-selling. Mainstream experts praised their “quick thinking” solution to gain the market’s upper hand. So, are they right? Well, we reveal whether 3 previous short-selling bans in the US and Europe succeeded to stop the bleeding in stock values -- AND -- whether the most recent prohibition will do so now.
 
Settling the Rate Debate Once & For All: Global central banks have slashed their key lending and mortgage rates to historic lows in hopes of jumpstarting the main engine of economic growth: Consumer borrowing. Well, our eye-opening line-up of charts on page 8 set the record straight:
 
  • UK Consumer Credit growth from 1998 to present day
  • Dwelling-secured lending growth from 1998 to present day 

Both charts reveal whether low rates have coincided with a HIGHER rate of borrowing.

Tap into these insights now via a 30-day RISK-FREE trial subscription to The European Financial Forecast Service. Subscribe today, and you'll also get instant access to the still-valuable July 2012 European Financial Forecast publications. 

Plus, get 2 of Robert Prechter's best-selling books, free.

 
Here's what you get RISK-FREE for 30 days:
 
1. The European Short Term Update
A near-term focus on European markets aims to give you the insight you need to act decisively before short-term market moves. The Update is published every Monday, Wednesday and Friday, so you're never in the dark about near- and intermediate-term trends in Germany's DAX stock index, Britain's FTSE-100, France's CAC40 and Eurozone's Dow Jones Euro Stoxx 50 -- and other markets.
           
2. The European Financial Forecast
With an intermediate- to long-term focus on 12+ European bourses, you get the invaluable big-picture outlook most investors only dream of. You tap into important social trends moving alongside the regional indexes, and be warned of developing market opportunities long before they occur. You get the knowledge to anticipate how the waves of social mood will affect the political and corporate environments across Europe, helping you invest with confidence.
           
3. The Elliott Wave Theorist
Trusted since 1979, Bob Prechter's straight-talking Elliott Wave Theorist is the bedrock of EWI analysis. Delightfully contrary, refreshingly logical and downright accessible, the Theorist is a must-read for every independent investor. You get thought-provoking analysis and forecasts on the near-, intermediate- and long-term direction of the financial markets, critical trends in investor psychology plus timely in-depth research and insights you're guaranteed not to get from any other source.
 
 
You can try to keep up with 45+ countries on the European continent and its 5 major stock markets yourself -- plus struggle to catch developing opportunities in lesser-followed markets -- or you can tap into the mother lode of unconventional, yet accessible analysis with our European Financial Forecast Service. Let us research the markets for you, so you can concentrate on navigating opportunities that arise in: 
  1. Germany's DAX stock index
  2. Britain's FTSE-100
  3. France's CAC40
  4. Eurozone's Dow Jones Euro Stoxx 50
  5. The Netherlands' AEX
  6. Switzerland's SMI
  7. Spain's IBEX 35
  8. Italy's S&P/MIB
  9. Belgium's BEL20
  10. Austria's ATX
  11. Sweden's OMX
  12. Norway's OBX
  13. Greece's FTSE ASE
  14. Russia's RTS
BONUS: Your risk-free European Financial Forecast Service subscription also gives you instant online access to EWI's advanced Elliott wave tutorial, classic EWI reports, multimedia files, answers from analysts on EWI's Message Board, educational tools, and more. Best of all, these extra resources are 100% free.

Get Ahead and Stay Ahead of the Investment Herd in European Markets Now, RISK-FREE for 30 Days >>

 

 

Tags: AEX, bailouts, Bank of England, CAC40, DAX, diversification, euro, euro stoxx 50, european central bank, European debt crisis, FTSE, International Monetary Fund (IMF), quantitative easing, safe haven, Swiss Market Index (SMI)
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