It hasn't been a great year for European economies. Italy has slid back into a recession. German GDP contracted in the second quarter, and German finance minister Wolfgang Schaeuble reportedly said on Thursday that the Eurozone's strongest economy is likely to miss its 1.8 percent growth estimate this year. Across the Eurozone, zero growth was shown in the second quarter, and recent manufacturing data indicates that the third quarter may not be much better.
Still, these bad numbers haven't been too damaging for global risk assets—after all, they have clearly increased the European Central Bank's appetite to stimulate the economy. But there may be a limit to how bad Europe can get before bad news becomes bad news once again.
In fact, serious concerns about the Eurozone economy could be one reason why stocks didn't react too enthusiastically to the ECB's surprise Thursday announcement that it would cut rates and commence asset purchases.
The "aggressively dovish moves by the ECB are not being taken well. They're being seen as a sign that the fundamental growth in Europe—which seemed promising less than a year ago—doesn't have a chance and therefore the ECB has to keep papering over the problems," wrote strategist Michael Block of Rhino Trading Partners in a Friday note.
Judging by the muted, even skeptical market reaction to the ECB, investors "are certainly considering the notion that bad news is bad news," said Jim Iuorio of TJM Institutional Services. He added, however, that "I still think they're going to come to the conclusion that it's not. They're going to decide that more money in the system has to be a good thing."