Spain Spurns Traders As Estimated Second Quarter GDP 2012 Fell 0.4 Percent:
Traders were already uncomfortable going long U.S. equities when Spain’s yield on the 10 year note is above 7 percent, but today news came from across the ocean that the Spanish recession worsened for the last 3 months. In the second quarter ending in June 2012, Spain, the fourth largest economy in the euro zone, fell deeper in the economic doldrums as their economy contracted 0.4 percent from the first quarter, the Bank of Spain said today in a monthly bulletin. The decrease comes right after a weak first quarter where the economy contracted 0.4 percent and its the country ‘s third consecutive quarter fall in GDP.
Europe is back in the front section of most financial news websites and it’s a trending topic again. This could be an opportunity for investing and getting U.S. equities at low prices for the next few weeks. Euro fears tend to loose steam after the first few days in a row. It’s really not news to most traders that Spain’s economy is in chaos but the trading sentiment change is important to monitor. U.S. equities fell in the opening session but ended the days off the lows with the S&P 500 ending the day at 1350.52 down -12.14 or -.89 percent along with major markets around the globe.
The U.S. economy is also contracting and the cross-contagion effects with Europe and China are hindering global economic growth. The jobless claims number this week (see July 2012 estimate) will give further clues that the unemployment rate won’t change much for July 2012. We are buyers on weakness and some market participants capitulated by leaving the market today which could give it room to go higher after the short term weakness subsides.