A Growth Story - The macro picture right now is definitely a growth story but not the one that I had imagined.
Last week, the Eurozone announced that its economy actually grew in the second quarter, contrary to everyone's opinion about how rough of shape the continent is in.
At the same time, after the "experts" predicted modest expansion in the States, the economy shrank by a little less than 1% in real terms during the second quarter.
Mind you, in nominal terms, the economy stateside grew considerably; it turns out, however, that inflation gobbled up all of those gains and then some, putting the economy into the red for the second consecutive quarter.
Inflation in Europe is also a massive problem. Their number is 8.9%. That's historically high, and it probably reminds some of us (or our parents?) of the 1980s when hot inflation was more or less the norm in many parts of the world.
The kicker for Europe is energy security.
Germany is the largest economy in Europe, and it is by far the most modern from an industrialization and technology perspective. Capricious, stop-and-go energy deliveries from Russia crushed the German economy in the second quarter.
For this challenge, there is no solution in sight. Ze Germans are likely going to get the short end of the stick for as long as Putin is a pariah amongst world leaders.
Contrast that with the US economy. Rising energy prices have hit consumers in the wallets and businesses in their financial statements, but it's relatively unlikely that economic output will be literally throttled because there's not enough oil or gas to scale a factory up to full production.
Energy security is national security. With enough pain from an energy crisis, we could very well see heightened political and diplomatic tensions that could escalate to something more serious if cooler heads don't prevail.
Another geopolitical catastrophe, whether it's an energy crisis or a famine, would not be good for markets. If you've enjoyed this bear market rally during the last month, you'd probably not enjoy the backslide caused by another conflict in Europe.