Morning Business Memo:
Fasten your seatbelts. This could be a bumpy ride. Europe is still by far the dominant story investors are reacting to. Global markets don't quite know what to make of the Spanish bank bailout. First, there was euphoria, and in the hours after the details were announced, global stock markets rallied. Then gloom set in with the realization that Spain's biggest problem may not be too much debt, but the crippling impact of a worsening recession. This morning stock market futures are up, but at the same time Spain's borrowing costs rose sharply for the second day in a row. The interest rate - or yield - on Spain's 10-year bond rose to 6.62 percent, close to the 7 percent level that forced Greece, Ireland and Portugal to ask for more rescues of their public finances. Go figure.
Only three things can be said with any certainty. 1: After three years, Europe's financial problems are far from over. 2: No one knows how this thing will end, whether it's a euro currency crack up or a new federal united states of Europe. 3. Europe matters. This whole mess will have a big impact on our economy and 401(k) plans.
Hey, how about a little good news? The US Energy Department said the average price of a gallon of gas fell 4 cents a gallon in the past week. And today oil touched an eight-month low near $81 a barrel on futures markets in Asia. One cause of the drop is worry that a slowdown for the global economy will mean less demand for oil and other energy sources. That said, cheaper oil will almost certainly lead to less-expensive gasoline for US motorists and transport firms.
Facebook is getting a boost from Apple, which is building the social network deep into its iPhone and iPad software. With the next version of Apple software, users will be able to update their Facebook status by talking to their phones. The news failed to lift the value of Facebook stock, which fell again yesterday - and is now down 29% since its IPO.
Carbon crunch. The global aviation industry group warned today that governments might be moving toward a trade war over Europe's carbon charges on airlines. China, India, Russia and 26 other governments that oppose the charges issued a joint declaration in February that cited possible retaliatory steps such as imposing charges on European airlines. "The last thing that we want as an industry is a trade war," said Paul Steele, director of environmental issues for the International Air Transport Association, at an industry conference in Beijing. "The problem is that the way things stand right now, I think we are on the brink of something like that happening," The European Trading System requires airlines that fly to and from Europe to buy permits for all the carbon they emit en route. The charges took effect Jan. 1 but airlines will not be required to pay until next year.
Richard Davies Business Correspondent ABC NEWS Radio Twitter: daviesabc