Terror Strikes in Europe Again. My Thoughts …
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Two
explosions rocked a departure hall at the Brussels Airport, with at
least one being attributed to a suicide attacker. Those detonations
killed 14 people at around 8 a.m. in Belgium, and injured more than 90.A
second explosion struck a train car in the Maelbeek subway station, a
central Brussels metro stop that’s near multiple offices of the European
Union. At least 20 people died in that attack, while more than 100 were
wounded.These
attacks come just days after Salah Abdeslam, one of the main
plotters/terrorists involved in the Paris strikes, was arrested. One
hundred and thirty victims died in those attacks, carried out at night
on Nov. 13.Belgian
transportation networks were completely locked down in the wake of the
attacks, with flights in and out of the airport canceled. All subway,
bus, surface tram and many train services, including the popular
Eurostar and Thalys networks, were also shut down in the country.
 Brussels is in the heart of Europe and is the home of NATO.
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One key problem is the unprecedented wave of migration from troubled countries in Africa and the Middle East. Many analysts fear terrorist operatives are slipping in unnoticed amid the flow of tens of thousands of legitimate refugees.
Experts also worry that Europe’s relatively open border system, and lack of effective intelligence sharing, could allow terrorists to continue planning and carrying out attacks like this one with relative ease. They also cite the insular nature of some of the immigrant communities, and the economic disillusionment many migrants face when they get to Europe, as reasons why intelligence agencies have trouble infiltrating terrorist networks.
Personally, I travel to Europe every fall for an investment conference hosted by the publishers of the German-language version of Safe Money Report. I’ve been to Munich, Cologne, Bonn, Frankfurt and Hamburg in the past half-decade as part of my work duties.
I’ve also spent time touring Prague, Berlin and Amsterdam during my downtime, not to mention London and Paris years earlier. I’ve traveled by air, train, tram, bus, taxi and subway and covered untold miles on foot. I don’t have any intention of changing my future plans.
But I’m sure plenty of tourists and businesspeople are doing so. At the same time, today’s attacks only serve to underscore the fact Europe faces multiple political, economic and humanitarian crises.
| “Today’s attacks underscore the fact Europe faces multiple political, economic and humanitarian crises.” |
That’s why investing significant amounts of money in European stocks or European ETFs is a dicey proposition. I would rather stay focused on lower-risk, lower-volatility, higher-yielding, less-economically sensitive companies here in the U.S. Holding safe-haven investments like gold in an uncertain world like this one, can also provide peace of mind and wealth protection.
Now, I’d like to hear from you. Will this latest attack impact your travel plans? If so, how? What do you think about Europe’s counterterrorism efforts? Are there additional steps that authorities could take to prevent attacks like those in Brussels and Paris? In the bigger picture, what does this say about the political and economic challenges facing Europe? Use the comment section below as a sounding board.
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Reader Anthony G. said: “Nature knows that there are too many bulls. The market is overbought. The bears will bring it back to balance.”
Reader Mike S. also sounded a note of caution, saying: “PE ratios are too high … corporate profits are shrinking … and this market is overpriced for reality. Look in the mirror and ask yourself about the market, and you’ll find it’s supported by the Federal Reserve.
“They are not man/woman enough to admit this. They support the market with manipulated interest rates. If we manipulated our business like the Fed, we would be in jail.”
Reader Rickard brought up the impact of central bankers on markets, saying: “It’s going to be incredibly hard for this market to fully break down. The Fed can’t let this market tank because if they do lose control, they don’t have any other tools to stimulate the market (given ZIRP, etc.). Previous bear market cycles like 2002/3 and 2008/9 have had interest rates much higher.”
But what can central bankers really accomplish? Reader Chuck B. thinks it isn’t much. His take:
“What tools does the Fed have to keep the markets from the tank when they decide to go there? There is no visible support for where it is now. Hopes and dreams? They are only good until they are dashed, and they will be, of course – sooner or later.”
Finally, Reader Al said: “U.S. markets may witness an influx of investments from Asia and Europe since only the blue-chip, well-capitalized companies with excellent balance sheets are stable enough to hold up against the financial debt situation and lack of global economic progress. The U.S. markets provide a better safe haven, although trillions of dollars in debt will raise its head sooner or later. A roller-coaster ride is in the cards.”
Thanks for sharing. The biggest issue I have with the kind of central bank intervention we’ve seen recently, and its impact on asset markets, is the timing. The massive interventions unleashed in 2008-09 came at the tail end of a bust phase in the credit cycle. Real estate prices had already tanked. The stock market had already crashed. The economy was already mired in the depths of a recession.
So when the Fed unleashed things like QE, and the Treasury did its bank stress tests, it worked because sentiment was wildly bearish and a lot of the systemic rot had been purged. This time, the European Central Bank and its foreign counterparts are unleashing bazooka after bazooka at a time when the asset markets are very close to their highs. The M&A, IPO, junk bond and commercial real estate markets have started to deflate, but they haven’t fully crashed yet.
That’s why I find it highly unlikely we’ll be up and off to the races again. It’s just not the right point in the cycle. Support for that view comes from the types of stocks and sectors that are doing well, versus those that are underperforming. It’s not technology, financials, materials, and the like rallying sharply to new highs. It’s utilities, telecoms, consumer staples and other defensive sectors leading the way.
Agree? Disagree? Have any other observations? Let me hear about them in the discussion section below.
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Idaho
Democrats vote for their presidential candidate today, as do
Republicans and Democrats in the states of Arizona and Utah. Donald
Trump is expected to win Arizona, though Senator Ted Cruz may be
competitive in Utah. Bernie Sanders is expected to deliver strong
results in Utah and Idaho, though Arizona will be a tougher slog.OPEC and non-OPEC members may freeze production at January levels even if Iran doesn’t participate, according to the Financial Times. Representatives
from several countries will meet in Qatar on April 17 to see if they
can hammer out an agreement. The problem is that a production freeze
would lock in near-record levels of output, resulting in a limited
impact on the world’s oil supply glut.I’ve been warning about a top in the commercial real estate market for a little while now. Today, the Wall Street Journal
reported that sales of CRE property sank to $25.1 billion last month.
That was a 47% plunge from a year earlier, and a 46% drop from January,
according to Real Capital Analytics. Pricing also appears to be leveling
off after a large jump to sky-high levels in the past half-decade.Do you believe the commercial real estate sector is topping out yet again, and if so, will the downside be as severe as we saw almost a decade ago? What do you think about oil prices and the chatter about a production freeze? Any thoughts on the latest round of primaries and caucuses? Share them below when you have a minute.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in
Journalism and a B.A. degree in English in 1998, and went to work for
Bankrate.com. There, he learned the mortgage and interest rates markets
inside and out. Mike then joined Weiss Research in 2001. He is the
editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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