May 30, 2013 | By Scott Minerd
Europe has had one of the nastiest winters on record, but hopes are high for a better summer. This is analogous to the economic outlook for the region. Brussels has announced a six billion euro program to reduce unemployment called a "New Deal" for Europe, echoing the language used by Roosevelt in the U.S. in the 1930s. This comes with a formal relaxation of the European Union’s (EU) austerity targets in exchange for labor reforms across the continent.
The focus of most of the policy reforms is on the periphery, but France aims to create half a million new jobs over the next three years, and Germany is preparing to relax immigration and provide training to reduce the labor shortage in high tech engineering jobs. The EU is also seeking to improve infrastructure with a program that emulates Build America Bonds called "Project Bonds." There is likely to be an announcement of a program in which the European Central Bank will securitize assets away from banks’ balance sheets by the end of the summer. Adding all of this up, it appears to be "Morning in a New Europe,” bringing about a number of attractive investment opportunities.
The credit environment in the eurozone’s real economy continues to deteriorate, despite a pickup in money supply growth. M3 money supply rose 2.8% year-over-year in April, while bank lending to households remained flat, and loans to the non-financial corporate sector fell 4.6% from a year ago. The divergence reflects the ongoing breakdown of the transmission mechanism for monetary policy, indicating an increasing need for European policymakers to implement more specific measures to address the credit constraints in the private sector.
Source: European Central Bank, Haver Analytics, Guggenheim Investments. Data as of 4/30/2013.
This article is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This article contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author’s opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. ©2014, Guggenheim Partners. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.
After several quarters of low volatility, tight spreads, and abundant liquidity, financial conditions are shifting.
New developments in fiscal policy, the labor market, and the neutral interest rate suggest that the expansion could extend into the latter half of our recession range.
A framework for transitioning sustainable investing to an institutional asset class.
Global CIO Scott Minerd and Head of Macroeconomic and Investment Research Brian Smedley provide context and commentary to complement our recent publication, “Forecasting the Next Recession.”
In his market outlook, Global CIO Scott Minerd discusses the challenges of managing in a market melt up and highlights several charts from his recent piece, “10 Macro Themes to Watch in 2018.”
You are now leaving this website.Guggenheim assumes no responsibility of the content or its accuracy.
Your browser does not support iframes.
2018 Guggenheim Partners, LLC. All rights reserved. Guggenheim, Guggenheim Partners and Innovative Solutions. Enduring Values. are registered trademarks of Guggenheim Capital, LLC.