In his latest note, David Zervos draws the inevitable comparison between the current economic situation (whereby US investors have to be nervous of Europe) and last night’s thrilling conclusion to the Ryder Cup (where the Europeans beat the US in a major comeback).Says Zervos:
Watching Europe go down this tortuous economic path is almost as painful as watching replays of Martin Kaymer sinking the winning putt on the 18th at Medinah. Europe is a thorn in the US’s side, both on the golf course and on the global economic playing field. The good news however is that EMU will eventually head down a decidedly Mediterranean policy making path – it’s only a matter of time before the French, Italian and Spanish axis takes over full control of the Euro printing presses. The Germans can savour their victory on the golf course, but they won’t win the battle for the ECB. In order to save the Euro, they will have to print – ALOT. Those southern European pensioners and workers must have their nominal contracts honored in order to keep the EMU structure together. Europe will end up going the same route as the US – Maggiore Draghi will deliver a code red. As a consequence, “non-printable” risk assets will remain the only safe assets in every financial market. Good luck trading.