Things look good at the moment!
The US, EU, Japan and Asian Stock indices have attained new highs upon positive news from various parts of the economies.
If you take a closer look at the gains made by various regions for the month of March, you will notice that Europe has outstripped other economies.
The Black Horse
The Europe regions is seen by many investors as a place of little dynamism, shackled governments and of slow growth. The perception is perhaps created by popular press coverage on union movements and their comprehensive welfare schemes. However, the European region is by no means homogenous despite the formation of the European Union. With the inclusion of the Eastern Europe into the EU trading bloc and the competition from Asia, the European region has the potential to reform itself and position itself for the next decade of growth. The Eastern Europe is the factory of Europe, capable of producing cost effective and high quality goods and service, not unlike the relationship between China and Hongkong. With a highly developed R&D and service industry in Western Europe compared to Asia, they can outsource their manufacturing needs to Eastern Europe and potentially still be a winner in the race of competitive advantage.
That is, if they can get their act together
The valuation in Europe remains low compared to US and even Asia. We foresee that the European Markets may potentially do as well as the Asian markets this year.
The Next Big Thing?
The market is poised for another major bull run. The S&P500 has hit new highs despite rising oil and commodity prices and rising interest rates. The next big things will begin once the Fed stops rising interest rates. With the combination of favorable world economic development and sustainable growth, we may be seeing a big bull run by the end of the year.
How long will this bull run? Past history has predicted that it will end by the start of year 2007. Meanwhile, we just enjoy the run and leave the worrying after we have pocketed a tidy profit.
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