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Europe - All posts tagged Europe

  • Feb 23, 2012
    2:24 PM ET

    How to Bet on Europe’s Recession

    Europe expects to be in a recession this year, and the continent’s Central Bank isn’t budging on the need for severe austerity measures for the worst-hit countries. But some advisers and fund managers see opportunity in this continuing gloom.

    The European Commission released fresh economic projections on Thursday that showed the euro-zone’s economy contracting in 2012, a sign that conditions have worsened since November, when the region was expected to show slight growth for the full year. Also Thursday, the president of the European Central Bank said countries like Greece should stick to their strict deficit targets, recession or no recession.  The EU now projects Greece’s economy will shrink by 4.4% this year, worse than the 2.8% contraction projected in November, and Italy and Spain are now projected to see contractions for the year. Like the euro-zone itself, they had previously been expected to grow slightly.

  • Nov 29, 2011
    10:02 AM ET

    Are Europe Debt Fears Finally Easing?

    Stocks jumped again this morning, following yesterday’s big gain on good news out of Europe, but financial advisers are warning clients against making too much of the bounce.

    Following reports that European leaders were nearing a new agreement that would give central authorities more control over countries’ budgets, the Dow Jones Industrial Average rose nearly 300 points. The rally comes after an unusually bad Thanksgiving week, in which the Dow lost nearly 5%. With yesterday’s lift, the major stocks indices are still in the red for the year but are inching toward break even, with the Dow down about 1%.

  • Nov 9, 2011
    1:16 PM ET

    U.S. Stocks Fall on Euro News – But Not For Long?

    Bad news out of Europe was once again dragging down the shares of American companies today. But some investing experts suggest the U.S. stock market may be breaking out of its euro-crisis spell.

    Although the Dow fell nearly 400 points today — sparked by a sharp rise in Italian bond yields which left investors worried Italy may need a bailout — there have been signs the U.S. stock market is starting to “decouple,” or move independently from European markets, according to Ed Yardeni, the president and chief investment strategist of Yardeni Research. Last week, “the bad news out of Europe tended to stay in Europe more so than in the past,” Yardeni wrote in a note to investors on Monday. While the MSCI Europe index fell 4%, and indexes in Germany, France and Italy were down 6 and 7%, the S&P 500 was only down 2.5% for the week, and the MSCI Emerging Markets index was nearly flat.

  • Nov 8, 2011
    11:07 AM ET

    7% and Counting: How to Still Get Italian Bonds

    Italian government bond yields crossed into what many analysts say is unsustainable territory today, with the country’s 10-year bond paying out 7.4%. Other countries, including Greece, have needed bailouts after their bond yields have risen above 7%. There’s speculation that investors have already essentially lost interest in holding this debt, and that yields would be higher (and prices lower) if the European Central Bank weren’t buying up bonds, according to the Wall Street Journal.

    For brave investors willing to take the risk, it is possible to buy these high-yielding bonds. As with any domestic bond, there are typically two ways to buy bonds issued by foreign governments: One at a time, or as part of a bond fund. For investors looking to buy individual bonds issued by the Italian government, advisers say they should start by calling their brokerage firm, many of which sell international bonds. (There is no equivalent of Treasurydirect.gov, where U.S. investors can purchase Treasurys via an auction.) Because bonds are sold over the counter rather than traded on an exchange like stocks, the brokerage firm’s foreign trading desk will ask around to find out what firms have Italian bonds and at what price they’re willing to sell, says Ethan Anderson, a senior portfolio manager with Rehmann Financial. Investors typically need to invest at least $10,000, he says; the bigger the purchase, the better the prices. “It’s like when you go to Costco: If you buy in bulk, you get a better deal,” he says.

  • Nov 7, 2011
    12:08 PM ET

    Which Funds are Most Exposed to European Banks?

    For American investors who own foreign-stock funds, new worries about troubled European banks may be a cause for concern: While many mutual funds have been cutting their exposure to these banks, several offerings are still heavily invested in the financial sector there.

    Many European banks still own lots of exotic mortgage products and other risky assets  — tens of billions of euros worth —  according to a report in today’s Wall Street Journal. Unfortunately for investors in foreign-stock funds, having some exposure to these troubled banks is hard to avoid. The MSCI EAFE index, a widely used benchmark for so-called developed international stock funds, is roughly 20% financial stocks. The S&P 500-stock index, on the other hand, has less than 15% dedicated to the sector.

  • Oct 3, 2011
    12:30 PM ET

    As European Stocks Fall, Investors Rethink Strategies

    The recent and quick decline in European markets has left yet another group of Main Street investors worried about their exposure to the continent.

    Over the past several years, many Americans’ portfolios have gradually shifted to heavier holdings in all things Europe. But since the start of the year, European stocks have fallen 19%, according to the benchmark Stoxx Europe 600 Index, with much of that plunge coming this summer. This morning, the index was down another 1.5%. As a result, Jeff Sica, president and chief investment officer at Sica Wealth Management, is telling clients to review their holdings and make some — though not huge — tweaks in order to avoid future losses.  “We’re in very dangerous waters right now, and this is a time to be defensive — this is not a time to bargain hunt,” says Sica.

  • Oct 3, 2011
    11:54 AM ET

    3 Ways to Handle the European Drop

    European stocks kicked off the week with yet another drop. The move followed more bad news from, you guessed it, Greece: The country indicated its budget deficit would be higher than the target it was supposed to hit to keep receiving aid from the International Monetary Fund, the European Union and the European Central Bank, as the WSJ explains.

    For American investors, this latest drop again raises the question of how much exposure a portfolio currently has to the troubled continent — and how that exposure can be safely reduced. Here are a few first steps.

  • Sep 12, 2011
    10:45 AM ET

    How to Build a Europe-Free Portfolio

    Mounting concerns about Europe’s debt problems, including new doubts about the health of France’s largest banks, has many investors rethinking their exposure to the troubled continent.

    Over the years, American investors have increased their allocations to foreign stocks. Investors currently have roughly $1.3 trillion in international equity mutual funds, about 3.5 times the amount from a decade ago, according to Morningstar. And euro zone countries typically account for the largest percentage of those holdings, followed by Japan.

  • Sep 9, 2011
    4:33 PM ET

    Dow Falls: Investors Weigh Moves

    Getty Images

    The markets suffered their worst loss since the middle of August today, as investors grew increasingly skittish about the financial crisis in Europe and doubts about President Barack Obama’s plan to stem unemployment at home. The news that the U.S. received “credible” information pointing to another terrorist attack to coincide with the tenth anniversary of the Sept. 11 attacks didn’t help.

    The Dow Jones Industrial Average dropped 303 points today, down almost 3% in the four-day week. Those are scary numbers for plenty of investors, particularly after the wild swings of early August. But some experts say the new developments create a buying opportunity. The plunge in Europe has battered a slew of European stocks, banks in particular. The better deals may be in European telecoms, which offer substantial dividends. European industrials are also cheap, and may get a boost in the coming weeks and months if the falling euro makes their exports cheaper.

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