|(Pic by NASA Goddard Photo and Video)|
Despite a brighter economic picture in the U.S., financial markets are still at risk of collapsing under the European sovereign debt crisis. Stocks are at crucial support lines, while the U.S. dollar could appreciate further against the European currency.
Sell Europe. For how long?
In reality, after Greece and Italy, another country will soon be under tight scrutiny. On Sunday, the Popular party of Mr. Rajoy has won the Spanish political elections. Like elsewhere in Europe, austerity and reforms are the keywords. The financial world is watching. For the first time in fourteen years, Spanish bond yields approached 7% last week. Borrowing costs will be under pressure, if Madrid fails to reassure the financial community. The E.C.B could be forced to step-up its sovereign bond purchases. There is no other choice, at the moment. Nonetheless, the situation is not sustainable over the longer- term. E.C.B. essence is at risk. As a result, European governments will be asked to approve the new EFSF guarantees for the second consecutive time.