William Riegel, Head of Equity Investments
Lisa Black, Head of Global Public Fixed-Income Markets
Joseph Higgins, Managing Director, Fixed-Income Portfolio Manager
In this special edition of the weekly market update, we summarize our perspective on the latest developments in Europe and their likely impact on the markets.
Volatility in the financial markets intensified this week in the wake of recent national elections in France and Greece. The shifting political landscape in those countries has sparked renewed fears about the European Union’s ability to resolve its economic, fiscal and sovereign debt problems. Investors are worried that progress on these issues could be derailed, with potentially negative consequences for the regional and global economies.
France: Reality versus perception suggests less upheaval than feared
Greece: No majority means another election and more volatility ahead
Looking beyond the elections
While the markets continue to fixate on fear, we remain focused on a broader range of factors and data that inform our perspective on the direction of the economy and the markets. For example, production numbers from Germany came in better than expected this week — a positive counter to weakness elsewhere in the eurozone. Additionally, with the recent sell-off in European equity markets, stocks in the region have begun to appear attractively valued, which could present selective opportunities.
Ultimately, there will need to be some type of end game to the crisis in Europe, through which liabilities are shared and economic growth is jump-started in some way —possibly with impetus from continued expansion of the U.S. and Chinese economies. With the U.S. facing its own degree of fiscal pain and political brinksmanship in the coming months, investors should expect to see continued volatility.
The information provided herein is as of May 9, 2012.
The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons.
Past performance is no guarantee of future results.
Please note that equity investing involves risk.