Europe is dead. Europe is cured. Europe is on a very lengthy path to “recovery.” If European risk assets are anything to go by in recent months, tangible progress in fixing Europe’s debt problem has been made and perhaps the mantra of “long live Europe” is more appropriate. The economic health of the Eurozone as a whole has arguably been upwards since late 2012 with the MSCI Europe Index up close to 15% over the past year alone. Of course, much of the upward re-pricing of European stocks, bonds and real assets over the past 18 months is in anticipation of recovery, rather than the effect of actual economic recovery. None of that vitiates the financial and political anxieties over the weakness of the recovery which makes for an interesting table discussion of “chicken or egg” – asset prices are rising because Europe is better (less fear) or Europe is better so asset prices are rising (more greed) – mostly a distraction rather than a distinction.
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