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European Stocks: At First, They Said…
Here we are – a year into the global liquidity crunch, and hardly out of the woods.
At first, they said that the U.S. subprime mortgage crisis would not affect the rest of the world – because seriously, how can someone's default on their mortgage payments in Iowa or Kansas do that?
Later, when it became clear that the credit contraction is a global problem, they said that if worse comes to worst, the Federal Reserve and the European Central Bank would "inject liquidity into the system" and save the day.
And here we are – a year later, and hardly out of the woods. This is a chart of the German DAX stock index, European Union's equivalent of the DJIA, showing its performance since the summer of 2007, when the credit crunch first hit:
Stocks around the world have been hit just as hard as those in Europe. Some even harder – like those in the emerging markets, the last line of defense for a "diversified global investor." China's Shanghai Composite stock index is down 50% from its all-time high; India's BSE SENSEX is down about 40%; and Russia's RTS is down over 30%.
And here's the very latest from Elliott Wave International's Senior European Equity Analyst:
"The [ongoing] rally might persist through September, but the choppy and overlapping rally of European stocks from the July low signals that the overall decline is not finished yet." –- Tom Denham in the new, September issue of EWI's European Financial Forecast.
- Germany's DAX stock index
- Britain's FTSE-100
- France's CAC40
- The Netherlands' AEX
- Switzerland's SMI
- Spain's IBEX 35
- Italy's MIB 30
- Dow Jones Euro Stoxx 50
- Russia's RTS
- Eastern Europe's CECE Overall Traded Index: Hungary, Poland, Czech and Slovakia.
- PLUS, a Special 2-page Study: "A Forecast Fulfilled: Russia Invades a Neighbor" – Bottom line, from an Elliott wave perspective, you can "expect more conflict between Russia and its neighbors." Why? See our complete reasoning in this Special 2-page Study.