Yeah, so a couple of things on Europe.
First, it looks like Martin Schulz isn’t going to let the country descend into political chaos after all, so that’s good. As Bloomberg exclusively reported this morning, the SPD “is ready to help the chancellor stay in office after her talks on forming a coalition with three other parties fell apart.”
That of course comes after Schulz repeatedly said it wasn’t an option, but now that push has definitively come to shove, the SPD is set to support her in a minority government as a “last resort.” Obviously, this isn’t optimal but it might have to do.
Meanwhile, the econ continues to surprise to the upside. The flash reading for France’s composite PMI in November printed at 60.1, well ahead of estimates and the highest in 6 1/2 years. Germany’s numbers beat as well (notably, the manufacturing print was 62.5) and on the whole, the Eurozone composite reading hit a 79-month high.
Between all of that and the dollar being under significant pressure from a combination of factors (see here), EURUSD is up for a third day to a one-week high:
Bloomberg’s Heather Burke notes that given France’s strong econ and the fact that German equities are more vulnerable to a rising euro (something Deutsche Bank recently flagged as a reason to downgrade them), it might be time for French stocks to outperform.
They’ve lagged YTD:
But unlike their German counterparts, remain well short of their 2007 highs:
Something to think about. Or not.