And of course, the wounds are still raw in Europe in the wake of last week’s Belgian bombings. The death toll climbed to 35 over the weekend.
There are many angles to this tragic story, and we’re all shocked and saddened by the developments there. Indeed, it’s one more problem that an already-struggling Continent must come to grips with, both culturally and economically.
Can it cope?
Economically, I have my concerns. That’s why I believe Europe is a dicey place to invest in right now, particularly with regard to stocks.
|Is Europe still a place to invest during this time of terror?|
A key reason is that Europe’s terror network looks to be even more extensive than many originally feared. I say that because police have raided dozens of locations all over Europe in the past few days. They’ve rounded up alleged accomplices, co-conspirators and document forgers in France, Belgium, Germany, the Netherlands and Italy.
Those raids are likely just the beginning because, as the Financial Times puts it: “European and Middle Eastern intelligence and counterterrorism officials — some of whom spoke on condition of anonymity — talk of a dynamic, multifaceted threat that law enforcement agencies are struggling to get to grips with, after Isis’ core leadership moved months ago to funnel significant resources into exporting violence to its enemies abroad.”
The story goes on to note that more than 1,200 European passport holders have traveled to Syria and returned. Many of them were likely radicalized and trained to wreak havoc back home. One man arrested in France late last week, Reda Kriket, was allegedly in the “advanced stage” of planning a terrorist attack there.
Then there are hundreds of other individuals who may be sympathetic to the cause, willing to provide logistical support, or otherwise facilitate homegrown attacks. Catching all of them would be difficult no matter what. But it’s particularly difficult in Europe, given operational, cultural, and other barriers to effective policing and counterterrorism efforts.
|“It will also increase friction over border security, likely driving up costs and operational difficulties for European businesses.”|
So as much as I wish it weren’t the case, Europe remains vulnerable to more attacks like those in Paris and Brussels. That, in turn, could give even more momentum to anti-EU, anti-immigrant political movements around Europe. It will also increase friction over border security, likely driving up costs and operational difficulties for European businesses.
It doesn’t help that the European Central Bank is also experimenting with radical, untested monetary policy … that European banks are a complete mess … or that European economic growth is anemic.
My prescription: Instead of investing in European stocks, focus on safer, higher-yielding, non-economically sensitive companies here in the U.S. Then balance out that exposure by maintaining a higher-than-average cash cushion, and by hedging your exposure with investment vehicles like inverse ETFs.
Now, it’s your turn to speak up. Do you believe Europe will get a handle on the terrorism threat? Or will it take more attacks to generate a more-effective government response? What steps do you think European officials should take? And how should investors respond to what’s going on over there? Let me hear about it below.
What’s going on in the housing market? What is happening on the terrorism front? How should investors respond to the latest news? Those are some of the issues you shared your opinions on over the past couple of days.
Reader Yuccatree3 said: “Investors desperate for yield have bought up available housing stock. There is little inventory here in Seattle. It doesn’t matter how low the mortgage rates are if there is nothing to buy.”
Reader Mike S. said: “The biggest reason for the housing bubble happening is low interest rates. There are other factors, but this is the largest. We have been through this before. I experienced this act, and it ends badly.”
Finally, Reader Lifestudent38 said: “Since the Fed raised rates once, and is likely to continue raising rates higher, loans will become more expensive and fewer homes will be purchased. The decreasing demand for homes will manifest in falling property prices, and likewise be reflected in decreasing returns for REITs and sector stock and ETFs. Expect some selloffs in this area!”
On the topic of terrorism, Reader Dick said: “It is only a matter of time before we have another attack here in the U.S. There are not only foreign nationals here that are planning attacks, but even more frustrating is the fact that we have native-born Americans who have some screws loose.
“Each and every one of us needs to be the eyes and ears for anything that appears suspicious, as the police and government officials cannot possibly be everywhere and see everything.”
And Reader Jim added: “The latest attack was a strike at the heart of European Liberalism. Brussels is the headquarters of NATO and the European Union. It’s a bureaucratic paradise. When you can’t defend your capital, you lose. The airport and the metro should be secure, if anything is.”
Do you have anything else to add on these topics? Then make sure to add your comments below.
The Japanese telecom company Nippon Telegraph & Telephone Corp. (NTT) is buying cloud and business outsourcing businesses from Dell for $3.06 billion. NTT wants to boost overseas revenue amid a stagnant economy at home, while Dell is trying to raise money ahead of a record $67 billion purchase of businesses from EMC Corp. (EMC).
Bernie Sanders swept three more states over the weekend, taking Alaska, Washington, and Hawaii by landslide margins. But he still remains far enough behind Hillary Clinton in the delegate count that he faces a steep battle for the Democratic nomination.
The mortgage refinance business is fizzling, so banks are once again pushing Home Equity Lines of Credit (HELOCs) to generate revenue. CoreLogic figures show banks originated $156 billion worth of the adjustable rate, revolving lines of credit in 2015. That was the most since 2007, and a 24% increase from 2014. The average HELOC was for just under $120,000, the most ever, according to the Wall Street Journal.
What do you think about the resurgence in home equity lending – is it a good or bad thing? How about the landslide Sanders victories out West? Also, do you think the latest acquisition news in the technology industry will help tech stocks? Hit up the discussion section below and weigh in.
Until next time,