John Bennett on Europe

ON EUROPE

Why we are retaining our anti-cyclical and anti-financials position.

The eurozone backstop that has arrived in the form of the European Central Bank’s (ECB) longer-term refinancing operations (LTRO) has done enough to convince the market that the ‘tail risk’ of banking failure has been obviated. However, I continue to harbour serious doubts that the situation is genuinely solved despite the recent rally in equity markets. What has changed is that the ECB has joined the central bank printing party, which makes asset price inflation much more likely. There are two things I would like to highlight about Europe. First, despite what may appear to be the cas...