Economic Outlook: Headline makers

When countries are making headlines, as opposed to companies, investors appear stuck steering from crisis to crisis.

Occasionally there's a hint of a solution for Europe that comes through, turning around the erosion that has pulled stocks down since this year's peak in May.

The last weekend, however, showed the market's vulnerability. European finance ministers were scheduled to meet in Poland and Wall Street enjoyed a rare five-day winning streak. The Dow Jones industrial average tacked on 517 points during the Monday to Friday rally.

Within the first two hours of trading Monday, the Dow gave up about half of that, losing 224 points on the weekend's biggest disappointment: The failure of the 17 finance ministers to come to an agreement on whether or not Greece could receive the next disbursement from the international loan package.

The DJIA clawed back much of that loss Monday afternoon. The reason: Greek Finance Minister Evangelos Venizelos put a positive spin on a conference call with eurozone colleagues.

At issue was whether Greece had met various financial targets that would assure the international community it is making headway to correct its financial mess.

And here's the hint many economists feared: Whether or not Greece had qualified for the next tranche was possibly moot or maybe a slam dunk because Greece announced two weeks ago that it expected its economy to contract 5.3 percent this year, much further than the previous estimate of 3.8 percent.

With that in mind, will Greece meet its next set of financial obligations?

Further, is the international community simply providing Greece with a road map to failure. The plan calls for Greece to sell billions of dollars of assets cut spending dramatically and raise taxes.

The assets, including defunct airports and stadiums, beaches, even a few islands, the government's share of OTE, the state telecommunications company, and Hellenic Railways, which is massively in debt. Some, granted, are not moneymakers, so selling might be the best choice short- and long-term. Other items, fall into the category of "you can't make money if you sell your assets."

In Washington Tuesday, the U.S. Federal Reserve's Open Market Committee meets for a two-day policy discussion, with investors intently interested on the Fed's next stimulus measure. The Fed could shift its portfolio to include more long-term securities, which would signal interest rates will remain low longer, a possible bonus for businesses. The Fed could also announce a new round of quantitative easing, which would not set well with the international community, and could even spark currency manipulating in retaliation.

In international markets Tuesday, the Nikkei 225 index in Japan fell 1.61 percent while the Shanghai composite index rose 0.41 percent. The Hang Seng index in Hong Kong added 0.51 percent while the Sensex in India rose 2.11 percent.

In Australia, the S&P/ASX 200 fell 1.01 percent.

In midday trading in Europe, the FTSE 100 index in Britain added 1.22 percent while the DAX 30 in Germany gained 2.09 percent. The CAC 40 in France rose 1.05 percent while the Stoxx Europe 600 gained 1.13 percent.
ANTHONY HALL || United Press International