There is a scene in "Men In Black" where all the aliens on Earth are abandoning it in droves at the first sight of an Arquillian battle cruiser. If you want to see what that exodus would like in real life, look no further than current day Europe:
10 disturbing signs from Europe:
- In rapidly increasing numbers, the rich of Italy, Spain, Greece, France and even Germany are getting out of euro-based assets by buying high priced real estate in London.
- Over 66 billion euros flowed out of Spain in March alone.
- Greece's market has fallen 27% just since the May 6th election. The June 17th "Re-election" is up for grabs and any result that does not result in a coalition that sticks with bailout provisions will probably mean the end for Greece in the euro.
- Personally I think Greece's goose is cooked as even China is planning for its eventual exit.
- Eurozone April retail sales come in at -1% M/M and -2.5% Y/Y, much worse than expectations of -0.1% M/M and -1.1% Y/Y.
- Spain is starting to warn that it is losing access to its ability to finance its debt in the bond markets due to escalating rates that are close to demarcation point of 7% again.
- The euro remains weak after the latest G7 teleconference. I would look for the currency to fall further after the next ECB meeting on Wednesday as I do not think decisive action is in the offing.
- Importantly for American investors is that Europe's weakness is starting to show up in companies' outlooks and guidances. Already Dell (DELL), Cisco Systems (CSCO) and NetApp (NTAP) have named Europe as the cause of their disappointing outlooks. Look for this gloom to spread to non-tech companies in the coming months.
- People are realizing the LTRO may not have had the desired effect. Italian banks, for instance, have already spent more than they received buying government paper and paying down loans.
- If things were not bad enough for Italy already, earthquakes in one of the most productive parts of Northern Italy provides a new economic headwind.
Be Careful Out There
Disclosure: I am long CSCO.