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I liked this quote from Niels Jensen’s latest monthly letter regarding the end of the Euro crisis. If, and when this dreaded crisis ever does end, he’s likely right that Europe will embark on the mother of all bull markets:”If structured correctly, a eurozone exit is not the Armageddon it is so often portrayed to be. When the perma bears realise that, and as they begin to see the benefits bestowed upon the first mover, the mother of all equity bull markets will be unleashed in Europe. As I have frequently pointed out in recent months (see for example here), European equities are extraordinarily attractively priced at levels not experienced since the dark days of the early 1980s. We are just waiting for the catalyst, but remember one thing – banks will not be the place to be.”
Many of these markets are so dramatically oversold that any sort of resolution will be positive simply by virtue of the fact that things couldn’t get much worse. But there’s still two directions this goes from here. Does Europe unravel in a disorderly manner resulting in prolonged pain or will they come together and form a true launching pad towards permanent solution? I still think a move towards fiscal union is the likely outcome, but the path to getting there is proving painfully slow. If and when a permanent solution is implemented Jensen will likely be correct….
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