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Happy Friday, Bull Sheeters. Today, we’re heading to the Old World. Europe.
The eurozone may seem like a basket case of an economic bloc that resembles few other global trading giants. But the symptoms you see here can be found in much of the developed world. It’s hobbled by an aging population, slowing productivity, political instability and stalled growth. Throw big fat risks like climate change into the discussion, and the problems of Europe start to look painfully familiar.
Europe though has one thing that’s hard to find (outside of Japan) elsewhere: negative interest rates. Negative interest rates are supposed to incentivize spending. And spending is supposed to spur domestic investment, and, hopefully, inflation.
It’s not going to script. Not that there’s much of a script. It’s such a new and bizarro phenomenon that there’s no mention of negative rates in any of those microeconomics textbooks sitting on your shelf.
Negative rates are killing the bottom line at most European banks. (And American banks are seeing something similar; a topic I will discuss in an upcoming Bull Sheet.) Meanwhile, eurozone inflation and GDP growth are still too low for anyone’s liking. Not surprisingly, investors are not happy.
And they’re getting impatient with Christine Lagarde, the new European Central Bank president. The European bourses took a nosedive during her press conference on Thursday (they’ve rebounded since) as she stuck with the status quo monetary policy. Those who wanted to hear how Europe plans to extricate itself from the trap of negative interest rates were disappointed.
So why should we all look at Europe with concern? Because growth among the trading majors is weak, if not in decline, as the chart here shows.
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And that’s despite the cut-cut-cut policy position of the ECB and the Fed. (China cut rates in November so it’s not exactly hawkish either).
As a Friday bonus, you get two charts today:

It’s becoming abundantly clear that stimulating growth through creative monetary policy has real limitations, and that reality is going to increasingly hamstring central bankers in the future.
Cue more unhappy investors.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
Today's reads
What to watch this weekend. Italians go to the polls this weekend in a regional election in Emilia Romagna, a longtime stronghold of the left. But the far right is making a huge surge across the country and this part of Italy now looks particularly vulnerable. A big showing by Matteo Salvini's League party could spell the end of the government in Rome, a prospect that could mess with European bourses and bonds on Monday.
Not okay, boomer. By 2030, the entire Baby Boomer population will be of retirement age, and that will have profound consequences on the economy. "The surge of baby boomer retirees will also present challenges for the financial markets," Ben Carlson explains in Fortune. They own the most stocks. What if they were to sell en masse to fund their golden years?
Banned for life. Regulators came down hard on Wells Fargo’s former chief executive John G. Stumpf yesterday, fining him $17.5 million and banning him for life from ever holding another banking job for his role in the sham bank accounts scandal. But don't feel too bad for Stumpf. Just before the scandal drew national attention in 2016, Stumpf exercised a boatload of his vested options, giving him "an enviable fortune."
Market candy
More precious than gold. The startling run-up in the price of rhodium, a precious metal key to cutting emissions from automobile engines, has caught the attention of everyone from commodities trader to thieves. It's up 61% so far this year, and demand is strong as automakers seek to build fleets of greener cars. But beware. Supply is notoriously thin and unpredictable, and so too could be demand as electric cars don't have much need for rhodium.
One last thing
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Correction
In an earlier version of Bull Sheet the headline of the chart referred to the economies as shrinking. That's not the case. They are still growing, but that growth is slowing. The headline has been corrected to reflect this.