It's a sea of red in the US and European equity markets following the victory of president Obama and statements made by ECB president Mario Draghi. US equities are now down well over 2% and most of Europe was down between 1 and 2 %.
Things would not be any different if Romney had won.
Regardless of who won, the global headwinds would have been the same, and the global economy is in a recession already (it's not widely recognized yet, but it soon will be).
Bloomberg reports German Stocks Decline After Draghi Says Crisis Hurting.
German stocks fell as European Central Bank President Mario Draghi said the debt crisis is hurting Europe’s largest economy and the European Commission cut its growth forecasts for the euro area, offsetting optimism about U.S. President Barack Obama’s re-election.
Draghi said the debt crisis is beginning to take its toll on the German economy. “Germany has so far been largely insulated from some of the difficulties elsewhere in the euro area,” he said at a conference in Frankfurt today. “But the latest data suggest that these developments are now starting to affect the German economy.”
The European Commission cut its growth forecast for the euro zone as the debt crisis ravages southern Europe and gnaws at the economic performance of export-driven Germany.
The 17-nation euro economy will expand 0.1 percent in 2013, down from a May forecast of 1 percent, the Brussels-based commission said today. It cut the forecast for Germany to 0.8 percent from 1.7 percent.
Expect German-Periphery Divergence to Resolve to the Downside for GermanyApril 4: Eurozone Composite PMI® Signals Recession Says Markit; France in Renewed Decline, German Growth Weakens, Italy and Spain Contract Further
The idea that Europe can avoid a recession is complete silliness. Europe is clearly in a recession already.
The amazing thing is things have not deteriorated more than they have. Unlike the Chief Economist at Markit, I expect the divergence to resolve to the downside for Germany, not for the divergence to continue for some time. Given conditions in Europe and Asia, the odds that Germany is immune from the global slowdown are essentially zero.
In what should have been expected, but somehow wasn't, Eurozone weakness is across the board except for Ireland bucking the trend for now.Any Growth Too Optimistic
I have been critical of Market analysis for months and this is the worst yet.
First they said Germany would prevent a recession, then Germany would decouple, now they suggest this is only a "technical" recession and the "the recession may be mild and brief".
The European recession will be neither mild nor brief. Spain, Portugal, and Greece are in economic depressions with no end in sight. Spain and Italy (the 3rd and 4th largest eurozone markets) are poised for steeper slides. Germany will not be immune to this as I have stated for months on end.
German manufacturing contracted in March and services sector will soon follow. For some reason, Markit economists cannot figure this out.