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Europe Stocks

Launched: February 24, 2015

Grexit averted, at least for now. As today's Daily Intelligence Briefing explores, the pundits are now split over who loses from the new deal: Greece, Germany, or the EU itself. To be sure, Greece's economy isn't a winner in the near term: more austerity, more recession, and a peak in its debt-to-GDP ratio of 200%. Politically, however, its place inside the eurozone has been re-affirmed by the other member states as a Greece's third bailout gets under way.

The deal itself leaves nearly everyone involved unhappy and still needs to be shepherded through Greece's parliament, where the prime minister faces defections in his party and the loss of a majority coalition, raising the odds of a government of national unity and/or snap elections. But with the support of other parties, passage is all but assured.

The lifting of that near-term source of uncertainty leads MRP to re-affirm a long position in European stocks. Since making that recommendation on February 24, 2015, the Euro STOXX 50 index of blue chip stocks has held its own against the S&P 500 in dollar terms –  and that's with all the renewed uncertainty about the fate of the eurozone. As Greece recedes from the headlines, we expect European stocks to pull ahead.

EUROPE'S STOCKS HAVE KEPT UP WITH THE S&P 500 DESPITE GREXIT FEARS



Source: Bloomberg, McAlinden Research


Last updated July 14, 2015
 
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Warren Hatch, PhD, CFA
Portfolio Management and Global Investment Strategy
McAlinden Research Partners

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