European equities were the classic ‘pain trade’ of 2017, the bull market’s wall of worry was scalable, even a slam dunk. Geert Wilders and Marine Le Pen were defeated in the Dutch and French election, reducing political risk in Europe. Greece got its latest bailout tranche from the IMF, EU and Berlin. Europe’s PMI were stellar in the 55–57 range. Dr Draghi’s hawkishness at the last ECB conclave led to a steeper German yield curve, a steroid shot for the bank stocks that dominate the Euro Stoxx 600 index. The momentum of the herd was only amplified after Italy bailed out Banca Veneto and Banco Popular di Vicenza with a €19 billion lifeboat without inflicting losses on junior debt holders. Bella Italia once again defied the Teutonic Fatherland with total impunity. Achtung baby, Frau Mutti!
Europe faces macro storm clouds this autumn My predictions for the next few months
The Macro View
