Small-Business Pessimism: A Canary in the Coal Mine?
A toxic combination of slow growth, limited ability to raise prices, and ongoing wage pressures has put small-business profit growth on hold.
Markets continued on a roll this week, extending their weekly winning streak to four. Equity markets around the world were generally up 1%-2% this week. The weekly gain almost got the S&P 500 back to the flatline for the year.
With corporate earnings season winding down and almost no U.S. economic news, the focus was on a broad range of new monetary stimulus actions by the European Central Bank. Those actions were far stronger than expected and included a multifaceted attack on slow growth and low inflation. However, the report came with one surprise that the market did not initially like. Namely, ECB President Mario Draghi said this may be the end of the line for even more negative rates. In the ECB's opinion, more negative rates would potentially harm banking system profits. These stingy-sounding statements quickly ended the markets' cheery reaction to the new stimulus.