It looks like it is happening in Europe. I had written quite a few times that the move up to 1270 in the SPX was likely most of the move. I still think the SPX could squeeze out another 15-20 points which would be small potatoes.
Europe on the other hand has done well the last few days. France and Germany are up better than 1.5% in the last week, the UK, Switzerland and the Netherlands are up better than 1% in the same time.
If we spent some time on this maybe we could figure out why but I don't think it matters. For now money has rotated into these markets. I can't recall reading any predictions that Europe would lead the world for the month but that has been the case. This is a great example of why investors should always have exposure to all parts of the market. You never know where leadership will come from. I'm relatively underweight western Europe but by having some exposure I can capture some of this. Being diversified is not that difficult to do. The discipline might be difficult, but the tactics are not.
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3 comments:
I think it's the same story for Europe as we have seen all year: decent valuations, a hint of M&A, robust results and sharply rising earnings expectations, and now (for the Eurozone at least) upside surprises on the macro data. The UK is a somewhat different picture: more than a hint of M&A, and reasonable valuations, but the macro picture is deteriorating. We may just be seeing the start of that playing out in FX, with Sterling taking a proper, though perhaps overdue, hammering today...
The year end rally is in the transportation index.
It's after Xmas this year!
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