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.  Below is some key data supporting our view. 

- Care 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.

- 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).

- 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.

David Fuller's view

Here is The Weekly View.

In the global beauty contest, the Eurozone is shedding its ‘avoid’ rating within the international investment community, due to the modest GDP improvements cited above and at least a lull in the ‘Grexit’ drama.  Moreover, some other regional investments face more uncertainty, from commodity exporters to Asia’s former ‘little tigers’.   

Additionally, EU stock markets are generally less expensive than Wall Street.  Additionally, they have a less expensive currency.  Best of all, EU stock markets have a huge QE tailwind of €60bn per month.