Over the course of the last several months I have found myself waking up at around 3:30 A.M. Eastern Time to get an understanding on how the various European Markets are opening up. Just as we saw correlations amongst various asset classes increase during 2008 we are indeed seeing the dramatic impact of worldwide correlation again. When there is good news out of Europe our markets are more likely to open higher. Consequently, when there is pressure overseas we tend to experience pressure at home.
Europe is currently at a financial crossroads similar to the United States in 2008. In addition, the markets are currently causing Europe to experience a crisis of confidence, thus encouraging a stronger economical and political response to stem future vigilantes. The main difficulty that faces Europe is the fact that there are 17 nations that make up the European Union. This means in order to fend off a potential financial crisis and become unified as one they need to first act independently of one another. As you would expect, the markets like unified solutions in the quickest manner possible so any delays might not be interpreted with open arms.
Paying attention to the recent correlation between Europe and the United States can help you become a more educated investor in this truly global economy we are living in today.
Please remember this is for informational purposes only and to always consult with your financial advisor regarding your specific situation. Past performance does not guarantee future results.
Eric Marvin, CFP®, CRPC®-Financial Advisor
JPT101111-1599
