This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

On The Pull


Visit: Finimize

What’s going on?

With Germany’s unemployment rate unexpectedly falling in November, the country might now dig its heels in more than ever against the European Central Bank (ECB).

What does this mean?

The ECB has long been calling for Germany to boost its economy through extra public spending, but positive unemployment data might give the country’s policymakers even more reason to pay no attention. Even so, German industry is still in recession, and manufacturers have announced thousands of job cuts this year – including carmaker Daimler on Friday. Economists are now worried those job losses could hit consumer spending, which has helped the German economy narrowly avoid its own recession. And data released on Friday showing falling retail sales did little to allay those fears…

Why should I care?

For markets: Breaking a bond.

German unemployment may be low, but European unemployment – which is in the double digits for countries like Spain and Greece – is still higher than in other developed markets. Friday’s data also showed inflation (the rate at which the price of goods increase) in the bloc picking up, perhaps comforting the ECB that its low interest rate policy may indeed be working. That might explain why the bank wants to shift the burden of boosting the economy from cheap money to increased public spending. But if that did happen, the mix of more government borrowing and higher interest rates mightn’t bode well for European bonds.

For you personally: Back in stock. 

Investors have been pulling money out of the European stock market all year, even though its shares are on track for their best year since 2009. They seem to be suspicious of the rally, but might find the “fear of joining in” becomes “fear of missing out” – especially if they see economy-boosting government spending, a Brexit resolution, or a trade deal between the US and China. European stocks, then, could have another good year in 2020 as investors jump back in.

Originally Posted on November 29, 2019 – On The Pull

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Finimize and is being posted with permission from Finimize. The views expressed in this material are solely those of the author and/or Finimize and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Forex

There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.

trading top