Italy swoops in to save another bank leaving taxpayers on the hook for over $25 billion
http://www.cnbc.com/2017/07/05/italy-sw ... llion.html
European money directly influences the bond market, and indirectly influences the stock market. And if they start pulling their cash out of our system…then what’s good for Europe could be very bad for the U.S.
European money directly influences the bond market and indirectly influences the stock market.
And if they start pulling their cash out of our system… then what's good for Europe could be very bad for the United States.
When the ECB prints money through its QE or its occasional, massive lending programs, European bank deposits rise.
Some of those deposits flow out of Europe and into the United States when European dealers and investors purchase U.S. Treasury bonds, notes, and bills.
Household deposits in Germany are up 4.9% year over year. German household deposit growth has accelerated since the U.S. presidential election in November.
The annual growth rate of household deposits in France is now 5.4%.
Though Italy keeps making headlines due to its financial sector, analysts have also warned on banking problems in Germany.
These include the reliance on the shipping industry, which used to be a stable investment before the euro zone debt crisis.
Other issues include the sheer number of banks in Germany with very little consolidation. There are approximately 2,400 separate banks with more than 45,000 branches throughout the country and over 700,000 employees,
The soaring euro has shot up nearly 12 per cent against the dollar since early April.
Eurozone stocks have already fallen nearly 6 per cent since late April.
Moreover, over the past fortnight, investors have withdrawn nearly US$1.5 billion from European equity funds
US$30 billion of inflows into European stock funds this year
Strong euro making it even more difficult for Europe’s central bank to hit its 2 per cent inflation target.
The withdrawal of monetary stimulus - which is likely to begin in the first-half of next year - will remove the most important source of financial stability.
The European Central Bank also raised its forecasts this month, to 2.2 percent.
ECB President Mario Draghi said at the time that the expansion “continues to be solid and broad-based across countries and sectors.”
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