Equity Weakness Ahead as Fiscal Union 'Riot' Continues
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Equity Weakness Ahead as Fiscal Union 'Riot' Continues
CNBC.com | July 04, 2012 | 09:47 AM EDT
Market participants will continue to "riot" to get policy makers to integrate fiscal policy across the euro zone and help restore consumers' confidence in the banking system, creating weakness in stock markets, Nancy Curtin, Chief Investment Officer of Close Brothers Asset Management told CNBC on Wednesday.
"There?s a lot of clarity in terms of what people are looking for in Europe, debt monetization, a fiscal political union (...). We believe they?re going to carry on to riot until they get it and that creates equity weakness ahead," Curtin said.
?You can?t get economic growth when the credit mechanism is broken,? Curtin said.
As lending growth in Europe and the UK has turned negative, and the three elements of bank lending - or the 3 Cs: confidence, clarity of regulation, and capital - got a bit more "hazy" due to the libor fixing scandal, "confidence in the bank lending system needs to be restored," Curtin noted.
"It's the conundrum of markets: is the economic slowdown which we?re clearly seeing a function of fiscal austerity, the excess (...) of leverage that still needs to be worked off, the non-function of the credit mechanism and how much confidence is linked to the missteps or inability of policy makers to lead Europe out of the crisis. We have the fiscal cliff ahead in the US and the slowness of the Chinese officals to pursue fiscal and monetary policy,? she said.
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Source: http://www.cnbc.com/id/48069649?__source=RSS*tag*&par=RSS
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