Monson: Where now for returns as Europe escapes Armageddon?

EUROPE ESCAPES ARMAGEDDON

The compromise reached by EU leaders on the three key issues facing the eurozone, namely restructuring of Greek debt (with private investors being forced to take a 50% loss), leveraging the EFSF (European Financial Stability Facility) to €1trn, and bank recapitalisation of €108bn, is complex, and yes, details are lacking.

However, the deal does though seem to show EU institutions and eurozone governments are at last determined to move forward and provide a package that can decisively boost confidence and provide a roadmap (of sorts at least) in the coming weeks and months. For investors, it means the ‘Armageddon’ option of eurozone break-up can probably be discounted and an ultimate solution of Federal European debt being part of the long-term funding of European Nation States (the ‘E-Bond’) is a little closer.    The strong early response of markets has, in our view, been logical – while there is stil...