03-16-2014, 04:02 AM
We’re seeing signs that the recovery in Europe is progressing. I wanted to take a moment to highlight some of the positives, uncertainties and opportunities that we believe investors should consider about the region:
First, Europe appears to be past the worst of the fiscal retrenchment drag on growth. Leading economic indicators are trending up, including purchasing mangers’ indexes (PMIs) and retail sales. Effectively, this second derivative of growth is positive, not just in the US, but in Europe as well.
Secondly, credit spreads in Europe are easing, particularly in such countries as Spain and Italy, whose spreads are at their best levels in years.
And thirdly, consensus European earnings growth expectations of +13% to 14% for the coming year look healthy compared to consensus earnings expectations of +10% for the US.1
Lastly, European Central Bank (ECB) policy is likely to remain simulative in 2014 given the lack of inflation and the need for the ECB to err on the more conservative side regarding monetary policy ahead of incremental bank stress test and restructuring initiatives
Leading Indicators Offer a Window Into Europe’s Recovery | Invesco US
However, some people have other ideas..