Actions: "Europe as the U.S."
Posted by admin | Under Uncategorized, business, events, life, money Friday Jul 2, 2010lefigaro.fr / jdf.com – The announcement of the aid plan for the euro area has given way to a new period of pessimism. In this context, how you position yourself on the shares of the euro area?
Matthew Grouès – We are clearly overweight on European equities for the simple reason that we believe that growth prospects are not worst four months ago. The markets have overshadowed the recent economic statistics suggest, however, believe a sharp upturn in Europe in the second quarter.
For a month and a half, markets follow a path contrary to that they should follow since the last published indicators: the series of nine sessions up in mid-June was made with deceptive statistics, particularly retail sales and the U.S. real estate.Unlike the sharp drop in early June took place in spite of very good publications on the ISM manufacturing and job creation. But it is true that today it is mostly good statistics that go unnoticed. It's a classic situation in the tops of cycles, markets do not allow the bad news and low cycles, they close their eyes to the good news. The crisis of 2008 is still in the minds of investors.
So much so that markets fear a simultaneous "double dip" (recession followed by recovery and then a new relapse, Ed) and a return of inflation. What is unthinkable. This proves that markets are in crisis of confidence and they evolve in a logical flow sellers rather than a fundamental logic. And to overcome this crisis of confidence will take time.
But the crisis of confidence in the euro area it is not it paradoxically favor?
It is true that mistrust vis-a-vis the euro favorable to European companies. The decline of the euro offset the restrictions inherent in the plans rigor. All countries in the euro area will clearly not accommodated in the same boat. So, for those who have taken a severe restrictive measures such as Spain or Greece, the balance will be negative. But for others, the impact on growth will be close to zero. It seems that the markets have rediscovered that the euro is a currency like any other. It's a currency shared by several countries. This inevitably creates a certain fragility and justifies a risk premium.
So you are betting that the European companies will catch up on U.S. companies?
Absolutely.European companies have to suffer the restrictions imposed by states, compensated as I said the decline of the euro. In contrast, the U.S. will be doubly penalized: first, that says depreciation of the euro said dollar, so a handicap to competitiveness for U.S. companies. On the other hand, said that restrictive measures in Europe, said reduced demand from Europe.
It is true that the shares are not expensive in all markets, but if U.S. stocks were gaining 10% to 20% in the twelve or eighteen months, the increase should be between 20% and 30% for European equities. Europe contrary to what they say is absolutely no more defensive than the United States. The proof of this statistic: Since 1996, the EuroStoxx amplified movements of the S & P 500 twelve years in fourteen.And two years where the reverse happened, it was during changeovers cycle.
According to a study OpinionWay, 50% French do not have stock and have never held. Furthermore, 66% of them justify their choice by the risk profile of the action. In other words, they are afraid of losing money. What do you think?
I understand their weariness regarding the volatility of financial markets and they prefer to invest in money market products they do not risk losing money even if they do not relate. Incidentally, this is symptomatic of the mindset of investors. There is such excitement in the markets that investors prefer not to lose money rather than win. But they must understand that the only time they have an interest in shares, it is precisely when everyone else shuns.Focusing on the assessment that the actions have on others is not the best indicator.
Also, do not overestimate the impact of financial markets on the real economy, and thus justify the real evolution of financial markets. It is often said that markets anticipate a six to nine months ahead of the changing economy. But this is not always true. The evidence: In 2009, the savings came out much faster from the recession that markets had expected.
I know this may seem surprising but it is precisely now that they must invest in risky assets.In addition to actions, we are positive on the credit for the economic recovery remains favorable and the spacing recent spreads (spread between a corporate bond and government bond, Ed) be reversed.
Five months ago, you bet on an ACC 40-4600 points by the end of the year. This bet is it still relevant?
I think for this year will be a bit complicated. However, I would very surprised if it does not exceed 4000 points. The current level of ACC 40 is not consistent with the economic situation is relatively good: it would be justified if we knew another recession within one year, but I think absolutely not.
Macroeconomic reasoning to 12-18 months also clearly suggests that markets are highly appreciated.Whenever Will it materialize? Hard to say! The market movements often snap on a "spark" a good economic figures, redemptions of "shorts" (the investor buys back the shares it had sold short, Ed), publication of results, etc. . The question is what will this time that "spark" and when it will happen.