http://profitabletradingtips.com/trading-investing/euro-zone-bailout-package-consequences - Euro Zone Bailout Package Consequences - Now that all parties are on board for Greek debt relief we need to ask just what the Euro Zone bailout package consequences will be. The immediate result will be the Greece will not default on its national debt in March of this year. But what else is going to happen as a result? Will trading Euro Zone stocks be profitable? Will the rise of the Euro that occurred immediately after the debt bailout deal was announced continue? Will the fiscal austerity measures being put in place across the continent be enough to forestall other debt defaults? And will the fiscal austerity measures so badly needed for fiscal discipline end up causing a recession?
Trading the Euro
One of the immediate Euro Zone bailout package consequences of trading the Euro was that the Euro went up against virtually all currencies. We can safely assume that this “sigh of relief” was due to the assurance that Greece will not immediately default on its debts and cause a domino effect of defaults in Italy, Spain, and Portugal. However, we can also assume that the economic growth of Greece will be a flat line for years to come. This will likely be the case despite pressure from other EU members to make the Greek economy more competitive by privatizing many government held industries. The likelihood of dismal economic growth is not limited to Greece in the years to come. The Euro may have popped up nicely on news of the bailout being finalized but may languish for some time to come as Europe deals with debt issues. The necessary austerity measures will likely lead to a recession in the next year or so and consequent downward pressure on the Euro.
Trading Euro Zone Stocks
Euro Zone bailout package consequences may be a bit better for some Euro Zone stocks. Although the EU economy may go into recession due to necessary austerity measures, there are strong European companies that sell their products across the globe. A cheaper Euro will benefit companies like Siemens who may produce products in a now more cost effective Euro Zone and sell internationally at lower prices. One of the Euro Zone bailout package consequences will be welcomed by long term investors. Volatility in trading the Euro and trading Euro Zone stocks may well fall now that the current bail out is a done deal. As always, traders are reminded that not all stocks will move in lockstep with the economy. In trading growth stocks it is often more important to have a clear view of a company’s products, their market, sales, and production efficiency that just how well the Euro or a given European economy is doing.
Trading Profits Going Forward
Smart traders will use technical analysis to keep in touch with day to day market sentiment. The negotiations for a debt deal for Greece are over. However, Greece needs to implement its austerity measures.
