If you want to watch an interesting proxy for the changing dynamics in Europe, just watch the Spanish market vs. the German market.
Here we represent it via EWP (The Spain ETF) vs. the EWG (the German ETF).
For several days now, Spain has been pushing higher against Germany.
And today, Spain is up 1% while Germany is down 1%.
This tell you a lot.
First of all, Germany’s economy, as we’ve been writing about is cracking (finally) as all of its export markets are deteriorating.
More importantly, there’s a growing sense that Germany is going to be on the hook, in some way or another, for the debts of its peers.
So even if the economy deteriorates, the Spanish market benefits from the fact that it may not go completely bust.
Watch this space.