ETF Trends
ETF Trends

The long term economic picture for Europe was the focus over the weekend of EU leaders.  They were looking at bailouts and economic reform for the euro zone to help boost economies, which would touch on the European-related exchange traded funds (ETFs).

Charels Forrell and Stephan Findler for The Wall Street Journal report that an agreement was met among the 17 member’s leaders to increase the amount the EU’s current, temporary bailout facilities can lend, to a total of €500 billion. They also agreed to create a new, permanent fund of the same size in 2013, when the temporary fund expires.  The meeting did not go without it’s disputes.

Ireland, Greece and Spain are currently facing economic woes of unseen measures: [Euro ETFs Look For Firm Direction.]

  • Ireland, which sought better terms on the $93.8 billion bailout it received last year, was rebuffed after refusing to contemplate raising its low corporate tax rate. Ireland’s newly seated prime minister, Enda Kenny, said after the meeting that he told the others he “couldn’t contemplate” a change to the tax rate. The Irish say their low corporate taxes—the rate is 12.5%–are central to luring foreign business to their soil and powering any economic recovery.
  • The leaders agreed that bailout loans in Greece should carry lower interest rates and agreed to cut off one percentage point. Athens, which received a bailout last spring, had asked for two.
  • Spanish banks are in need of $21 billion, to convince investors that battered balance sheets are not a threat. This amount was unforeseen. [ Spain ETF Affected By Moody’s Downgrade.]

The euro suffered losses before the leaders met, and the shared currency fell for the first time in one month against the dollar before the meeting, says Catarina Saraiva for Bloomberg.  In Monday’s trading, the euro rose against the dollar on news that the the countries had improved their response to the crisis afflicting member states.

  • iShares S&P Europe 350 Index Fund (NYSEArca: IEV)
  • Vanguard European ETF (NYSEArca: VGK)
  • CurrencyShares Euro Trust (NYSEArca: FXE)

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.