Weekend Market Commentary: Special Edition

Weekend Market Commentary: Part II: Getting Closer To A Correction!

UPDATED: 1130 EST 2014-08-31

Yesterday we discussed how the European Union was eventually going to be the recessionary downfall of the U.S. Financial markets. Today we elaborate on Europe’s edge of deflation caused by the EU’s broken bank sector and how they will eventually erode the U.S. financial markets walls of stability.

If the pathetic European fiscal waters pound the shores of solid financial rock long enough, the rocks of stability will crumble. If the rocks are already weak from distressing internal policies, then the process will only happen sooner. The eventual outcome of a descending, correcting or whatever you want to call it, of the U.S. Markets is on its way thanks partially to the EU.

Europe is in a lot of trouble because of the troubled Europe’s banks according to Alpha Now. The broken bank sector began years ago and like most problems that are not fixed only get worse with time. The accumulation of failed financial policies in the U.S. and Europe, encouraged by Keynesian dubious practices, are in the final process of taking both financial markets down. How far remains the question, but that event is not off into the next decade. We are in the final countdown.

Can Europe Avoid Its Own ‘Lost Decade’?

. . . falling bank lending has taken its toll on inflation . . . following the ill-advised increase in the rate of VAT that took place in April 1997.

Some claim that austerity measures in the euro area have largely been responsible for the failed economic recovery. However, we do not agree.

While austerity has not helped, it is the failure of the authorities to fix Europe’s broken banking system that is holding the region back.

(Click here for larger view.)

I am not sure the leaders of Europe really understand the situation they have there, but Keynesian’s usually don’t and love to experiment. Some of the solvable issues are obvious, but the power brokers in charge really do not want to fix them and lose their personal mightiness in the process. These barons of European financial institutions are imitations of what should be right as they corrupt the very institutions they serve to protect. Not all of the EU’s financial leaders are perverted, disingenuous or immoral, many are just dumb as a box of rocks, otherwise referred to as a Keynesian.

‘Analysts at Barclays expect eurozone inflation to head further south, to 0.2pc in the year to September, before “slowly recovering from October onwards”.’ The old hockey stick chart projection is always a favorite among optimistic analysts when ignoring the obvious quick sand in front of them.

Eurozone in crisis as inflation slips to five year low

Eurozone inflation fell to its lowest level since November 2009 this August, as analysts warned that price growth in the currency bloc is “worryingly low”.

Prices grew at just 0.3pc in the year to August, down 0.1 percentage point from July, according to a preliminary estimate from statistics agency Eurostat.

Slowing inflation may prompt the European Central Bank (ECB) to deliver new stimulus measures at its monthly meeting next week, as price growth remains well below the central bank’s target of just below 2pc.

“This is yet another bad indicator of the health of the eurozone economy”, said Luke Bartholomew, of Aberdeen Asset Management.

Europe’s banking sector is broken and needs to be fixed – NOW. I think it is too late to save the U.S. Markets, what are your thoughts?

“The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction. Where that is, I do not know.” – Alan Greenspan, July 30, 2014

WTI oil closed Friday at 97.03 (up +0.48 (+0.51%) )

Brent oil closed Friday at 103.14 (up +0.39 (+0.38%) )

The Demon The Gold Bears Are Mistakenly Overlooking

Gold closed Friday at 1305.40 (down -4.00 (-0.31%) )

Copper closed Friday at 3.107 (up +0.011 (+0.34%) )