Both Spain and France unveiled their new budgets today, and Spain disclosed the results of a new round of independent bank stress tests as the cherry on the cake. But -- as is common in this type of exercise -- some of the figures just don't add up. For example, the French budget assumes 0.8% GDP growth next year, which is above private forecasts. In the same week that Spaniards protested against austerity and clashed with police, the new Spanish budget calls for more of the same. The French CAC-40 index was off 2.5% today, while the Spanish Ibex 35 fell 1.7%.
U.S. stocks also fell, but they didn't fare as badly, with the Dow Jones Industrial Average
According to the Stock Trader's Almanac, stocks have advanced in every fourth quarter since World War II, excluding 1948, when an incumbent president wins the election. So, assuming Barack Obama takes the election -- as seems increasingly likely based on polls and prediction markets--is that a good sign for U.S. stocks next quarter? I think investors might be better served following events in European politics instead, for, as The Economist warned in its Thursday print edition, "unless the Spanish prime minister and his counterparts around Europe act, the single currency itself will once again soon be at risk."The other alternative is to focus on individual stocks; happily, The Motley Fool has analyzed the economic programs of both presidential candidates and found Stocks That Could Skyrocket After the 2012 Presidential Election.
Fool contributor Alex Dumortier holds no position in any company mentioned. Check out his holdings and a short bio; you can follow him on Twitter, @longrunreturns. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.
More from The Motley Fool
Does a Strong Start Make 2018 a Sure Winner for Stocks?
Find out whether the so-called "January effect" is real.
Meet the 2018 Dogs of the Dow
Learn the basics of this simple dividend-investing strategy.
The Dow's Worst Day in 2017
Even with big gains, there were some scary times for the average.