The European growth will continue and will encourage the European economy and challenge for the longer term. Despite the taxes are high and the public sector is very large, on the short term European growth, as in the US, will be improving nicely. In the Eurozone the number of building permits is going up rapidly and the construction sector is recovering.
The 2016 wages in the Eurozone has increased and inflation increased by 2%. The nearest Eurozone Sentiment Indicator is at the highest level since the beginning of 2011 and means that this year we could expect GDP growth at around 2%.
The problems in Southern Europe are not over. It could be that markets will be too optimistic in the coming summer period. Rising interest rates and renewed political discussions with Greece could lead to a further deterioration of the situation in southern Europe. Besides we expect that the weak economies of Greece and Italy could become problems in the stock market.
So all by all we maintain invested generally in stocks with a small overweight for the coming months.
Bart van Wagenberg.
Novacap Asset Management.