Every industry sector in the Stoxx 600 was up at one point Friday, as European stocks pressed to a fresh intraday high.
To be sure, economic optimism for the euro-area isn’t driving the gains. The derisive “Japanification” label is now affixed to Europe with super glue, and while there’s some hope that Christine Lagarde can engineer some dynamism by overhauling the ECB’s inflation strategy and badgering the likes of Germany into fiscal stimulus, doubts persist.
But those doubts underscore the case for accommodative monetary policy, even as skeptics rationally argue that doubling down on policies which have so far failed to stave off disinflation and stagnation is akin to Einstein insanity (i.e., doing the same thing over and over again and expecting different results).
In any case, it matters not in the near-term for local assets. The liquidity spigots are open, US shares (the global risk asset bellwether) are on fire and overnight, China delivered an upbeat set of data which suggests the world’s second-largest economy is well on the way to inflecting for the better, even as overall growth sits at a three-decade low.
The Euro Stoxx 50 on Friday rose to the highest level since April 2015.
If the gauge hangs on in January, it would be the fifth monthly gain in a row. That’s the best streak since 2012.
Meanwhile, implied equity vol. across the pond has collapsed over the past two weeks. The VStoxx fell to 10.5 on Friday.
It is now poised for a record low close.
