Global stocks fell broadly Thursday afternoon amid worsening concerns about a global economic cooling and a European debt crisis. Each of the three major US indexes were down, deleting all the gains they had made so far this year.
WSJ reports stocks are down 2.5% overall. It’s not just a reaction to the debt ceiling bill and the fear that we may be heading for a double-digit recession. Debt crises are hitting Italy and Spain and the rescue package for Greece may not have been enough. Investors are losing faith that policy makers will be able to adequately intervene.
Investors have been pouring into the Swiss franc, driving it up high against the dollar. You would think that would be good news. It’s not, it’s disastrous. Tourism is way off because everything costs so much, $23-$25 for a mixed drink at the bar. And the Swiss are driving across the border and spending their money in other countries because their francs buy so much more, which means cash that’s leaving Switzerland and helping out other countries. To combat this, the Swiss suddenly and unexpectedly cut interest rates in an attempt to weaken their currency.
Looks like those vaunted “green shoots” of the economy just got slashed and burned.