Not since World War I have European stock market values surpassed that of the United States… until today.
As reports surface that the $15.72 trillion combined market valuations of Europe’s 24 stock markets, easily exceeds that of the United States’ $15.64 trillion market valuation, most of the blame is being shifted to the rising euro, the enormousness of emerging market growth of European markets, and improving profitability in Europe. Plus, according to Thomson Financial, Europe’s market cap has risen some 160% since January 2003, as compared to a 70.5% rise for U.S. market caps.
But the fact remains the same. The United States’ economics and stock market indices are weaker than that of Europe’s given inflationary pressures, geopolitical pressures of Iraq and Iran, and the latest news of import duties on Chinese goods. Even with our global slowdown, the United States is imposing higher taxes on imports, which helped push our dollar 0.5% lower following that release.
But for an idea of how successful tariffs have been, take a look at steel’s success. For the last 40 years, U.S. auto and steel industries have been on the receiving side of tariffs. Yet they have little to show for it.
It’s as if the Smoot-Hawley Tariff Act of 1930, perhaps the most daunting of tariffs on international transactions, is haunting us all over again. Remember, if you will, this was the Act that imposed high tariffs, which resulted in European nations resorting to protectionism (as the U.S. is doing with China). This, in turn, forced international trade to rapidly decrease, which eventually lead to a global economic slowdown.
It’s a sign of the times, my friends. Should nothing change, the seismic shift of world market dominance could continue… for the time being, anyway.
TFN Global Alert - 4/4/07
Ian L. Cooper
Editor, Early Alert Trader |
