Europe Turns on the Pumps… And Stocks Rally
Just like pipelines… and just like transportation stocks… French stocks are starting the year with some good “price news.”
Over the past few weeks, we’ve noted the bullish action in pipeline stocks and transportation stocks. Both sectors started 2012 with positive price action. And so did the “Dow Industrials of France,” the CAC 40 Index.
#-ad_banner-#When it comes to monitoring the European debt crisis, one of the biggest focus points should be France. It’s the world’s fifth-largest economy… which makes it one of the economic engines of Europe, the world’s largest economic zone. France’s banks have tremendous exposure to the bad debts of basket cases like Italy and Greece. Many folks worry that if the crisis can affect France, it will kick off a credit crash. We last looked at this situation in November… when France’s CAC 40 approached dangerous new lows.
But as you can see from today’s chart, French stocks have rallied back from danger levels. European leaders have promised to print as much money as needed to “paper over” the region’s bad debts. This rally goes to show that if you pump enough credit and free money into a system, you can push up the price of almost anything.