Austerity risks continue for Europe

ON EUROPE

In terms of monetary easing the ECB has swung into action in a big way.

The ECB’s long-term refinancing operation (LTRO) has significantly reduced the liquidity risk for Europe’s banks, and an imminent credit freeze for the continent. This combined with an environment of low interest rates makes risk assets, including equities, more attractive. Global growth is reaccelerating, providing a boost for Europe’s multinationals. Positive economic news from the US and Asia is good for many of Europe’s exporters. Foreign markets account for an increasing share of the earnings of blue-chip Europe. There are companies in Europe that are trading at very cheap va...