Daily Gains Letter

debt crisis


Eurozone Recession Over, They Say; Time to Consider Investing There?

By for Daily Gains Letter | Aug 16, 2013

Eurozone Recession OverNo matter what the overarching economics are in the U.S., the fact of the matter is that you really can’t beat the Federal Reserve.

Sure, unemployment and underemployment are high, consumer confidence is down, personal debt is high, and housing prices are still 25% below their 2006 highs, but with the Federal Reserve dumping $85.0 billion per month into the markets and keeping interest rates artificially low, the markets can’t help but rejoice. And until those two dynamics change, the markets will continue to rally, with the odd pullback—which, for most investors, signals the perfect time to rebalance their portfolio.

And right now, it looks as if the winds on Wall Street are favoring the eurozone. After starting in the latter part of 2011, the longest ever eurozone recession has come to an end.

The economies of the 17-member eurozone grew by 0.3% during the second quarter, which is more than expected; the general consensus had the eurozone climbing at a rate of 0.2%. Some think the stronger-than-expected results provide further evidence that the worst of the eurozone’s debt crisis is over. (Source: “Eurozone comes out of recession,” BBC web site, August 14, 2013.)

Eurozone chart

But it might not be quite that cut and dry. The growth was driven mainly by business and consumer spending in Germany and France, the eurozone’s two largest economies. During the second quarter, Germany’s economy grew 0.7%, while France’s economy increased 0.5%.

Other countries in the eurozone have not been quite as fortunate. Spain and Italy are still struggling, Greece’s economy slipped 4.6% year-over-year, and the Netherlands and Cyprus are still in recession.

When the eurozone … Read More