Eurozone, A self-sustaining recovery

“After two recessions in seven years, we believe the evidence supports the beginning of a long, slow-growth expansion in the eurozone. As we have seen in the US, we believe that this expansion signals a strong environment for stock investors: profit margins rise, central bank policy remains very supportive and investors are pleasantly surprised by both earnings and economic data because expectations are low. Some key data supporting our view. 1) Car sales are up 7.5% year-over-year in June and have plenty of scope to continue to grow. At 800,000 last month, they are still well below the 950,000 average of the 1998-2008 timeframe. 2) The OECD’s Euro Area Composite Leading indicator has been in expansion territory for 19 months, and money supply is expanding as is the Purchasing Managers Index (PMI). 3) Retail Sales, having fallen from a high in 2008, have now been growing for 18 months at a rate consistent with the pre-2008 expansion.” (VIEW LINK)