Forecast: Dow Jones Industrial Average and the future of the euro

Dow Jones Industrial Average ceases to please buyers

In brief: New problems of the American economy and the threat of defaults in the euro area forced to decline the stock markets and pressured the euro. Dow Jones declines.

Dow Jones Industrial Average stands at around 10,272.59 points. Falling Dow Dzhones a little more than -20 points or -0.20%. Analysts have hope for the growth of Dow Jones Industrial Average at the end of auction. So, in the last day decline in the euro stalled. Yesterday afternoon data on the business climate index germanskomu IFO, showing growth instead of the expected decline, supported the euro. And then a substantial drop did not happen even though the yield poor statistics on sales of homes on the secondary market in the U.S., the euro showed a minimum of only 1.2244.

The Dow Jones yesterday played all negative of the day, having descended to the mark 10293, -1.43%. But now, the futures on the Dow shows growth at 0.47%. The price of oil are still high, the current 77.67 per barrel mark WTI. Before today’s Fed meeting markets stabilized. However, we are not inclined now to expect any surprises from the FOMC. News now empty and we have nothing to add to the ideas outlined in the previous reviews. We can only wait, when and where in Europe, happen a new event that will cause markets to talk about a new aggravation of the debt crisis. Will this be a statement of any government on the problems in connection with the debt, another provocative article in the newspaper or another downgrade of a country or a bank – we do not know. But on the whole course of events in recent months suggests that the anti-evrovaya campaign has not yet been completed. While the acute phase has passed, but periodic reminders that the problems in Europe are, we constantly continue to receive. So, today, George Soros in an interview with Die Zeit weekly said that does not preclude the collapse of the European Union. And, in his opinion, to blame for what is happening is not “Greece and other countries PIIGS”, while Germany with its anti-inflationary policy. Germany restricts the growth of wages in the country, creating a competitive advantage over other European countries. “Right now, Germany resets its neighbors in deflation, which will lead to long-term stagnation”, – says Soros. Also, in his view, Germany should not force themselves and others in a moment of crisis to limit state spending. Angela Merkel this month announced the project, according to which at least 5 years public spending in Germany should be reduced by 80 billion euros, which should reduce the budget deficit to the EU standards (less than 3%). “If Germany does not change its policies, its exit from the euro area will be a relief for the EU”, – said Soros. Note that his opinion was largely echoes the views of economist Nouriel Roubini, who calls for a radical mitigation of monetary policy in the euro area (reduced rate to 0, the increase in redemption of government securities from the market), otherwise return to the recession in Europe next year will be inevitable. We continue to expect a decline of the euro in the coming days and in the future the next few months, until the tension in Europe does not result in any significant shift in the overall situation.

Igor Tringlers
2010-06-23 15:32, Economics.

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