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EuroZone Fears — Have you checked the value of the Euro versus the Dollar lately? Yesterday it was holding at 20-year lows, around $1.02.
If you like sipping fruity drinks in Ibiza or Mykonos, this is good news, although hotels and Airbnbs don’t really seem like a deal even with a strong dollar.
There are two huge, massive concerns in Europe right now.
The first is very similar to our North American fears of an incoming recession. It’s like watching a train wreck materialize slowly; I just can’t turn my head.
The second major concern amongst our neighbors across the pond is energy. Namely, where the f*ck can we get it from and for cheap?
Something I’ve been commenting on for the last two months is that in the Northeast US, utility rates for electricity and natural gas are typically set with a time horizon explicitly identified for that particular rate. This enables the semblance of price stability for the consumer, even during periods of volatility.
Well, the “low season” for natural gas and electricity use up here is actually in the summer. Consumer energy prices are higher in the winter, so I’m waiting for the other shoe to drop this fall when we see that we will be paying $1000 a month to heat and power our homes.
Europeans also feel the same, except they’re scrambling to figure out how to even source energy to power their economy, homes, and offices.
This supply-side uncertainty is forcing Europeans to lose sleep at night, and if they can’t figure it out, so will uncontrollable shivering through a long northern winter a few months from now.
The silver lining: a slowing economy demands less energy. The moral of that story is that a Eurozone recession might mean a slight reprieve on energy demand. But that doesn’t guarantee that heating a home or apartment in Europe this winter won’t cost 4x what it did last winter.
If this sounds dire and like a bunch of doom and gloom, don’t just read it here. Take a look at inflation rates, European consumer sentiment, and PMI over there. These metrics are all indicating that the picture over there is even less rosy than here in the land of the free.
That being said, I’m still planning my European vacation with my strong dollars, and I am going to have a great time doing it.
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