European Revival?

Is Europe coming out of its funk?

For the past year and a half, the Euro-zone has been in recession. It started in late 2011, as the financial turmoil of the prior two years came home to roost. Banking sector problems, government austerity, and currency turmoil led the area’s decline. Unemployment has stabilized after rising significantly. Exports to the US, UK, and China are picking up, and industrial production–a leading economic indicator–is rising.

There’s still a pretty strong north-south split in the, though. In Germany unemployment is 6.8%; in Denmark its 4.3%, while in Spain, Italy, Ireland and France it’s above 10%, and in Greece–which has been in recession for five years–unemployment is 26%.

But financial markets have been pretty calm for the past year, even as Italy’s elections led to a deadlocked government, Portugal’s government faltered, and tiny Cyprus needed a banking-sector bailout. Yields on Spanish and Italian bonds are still lower than they were a year ago.

Still, the consensus of most economists is just for modest growth. The US probably grew at a 1.7% rate in the second quarter of this year; the Euro-zone is likely to just eke out a positive number. While it’s better to grow, it isn’t time to break out the champagne yet.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2013-08-13T10:07:56+00:00 August 13th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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