After a week of grazing 9,000 points, yesterday the Ibex passed this threshold as the risk premium fell to 240 basis points. It is clear that equities investors are starting to look seriously at Spanish stocks. US Fed Chairman Ben Bernanke is fueling this surge. In what some are calling the most significant economic event of the year, Bernanke announced after European markets closed that the US would continue to pump 85 billion dollars into its economy each month. Surprised that Bernanke would keep the funds flowing at this rate, Wall Street was euphoric.
The ugly face of the good news is that doubts about the real stability of the US economy could extend for several more months. Why did the Fed decide to stick to its stimulus plan? Because economic forecasts until 2016 indicate that growth will be less intense than projections from last June suggested. New forecasts show that the United States' GDP will increase three-tenths of a point less than expected (2.3% instead of 2.6%) and projections for the next several years are also down.
Still, unemployment will settle under 7% in 2014 and interest rates are scheduled to stay the same for at least another year. From the Fed's predictions it is safe to condlude that getting out of the crisis will take a long time, and it is still premature to think that all the hard work is done. The markets loved Bernanke's decision to keep the US economy afloat, but that euphoria contrasts sharply with the realization that this same economy will continue crawling for years to come.
