A strong rebound in the eurozone

Despite its down-at-heel reputation, the eurozone is looking surprisingly sprightly.

Continental Europe has a reputation as a"bombed-out economic has-been", says TheObserver, so investors will be pleased to see thatit is looking unusually sprightly. Euro-area GDPincreased by an unexpectedly strong 0.6% in thefirst three months of the year.

That's the fastestquarterly pace since 2008 and leaves both the UKand America standing. The jobless rate has fallen to10.2%, the lowest since the peak of the euro crisisin 2011. Household consumption and businessinvestment appear to have more than made up for alacklustre global environment.

France did especially well, registering the biggest boost in consumption since 2004 and the highestbusiness investment in at least five years. Meanwhile, Italy's unemployment rate declined to athree-year low, fuelling hopes of an end to stagnation in the labour market.

Take US profitswith some salt

All companies must filetheir results accordingto Generally AcceptedAccounting Principles(GAAP). But the figure theylike to present investorswith, the so-called"adjusted" numbers, often contain a more generousinterpretation of one-offcharges, or other forms of"distracting propaganda".

Sometimes there areseveral versions; GeneralElectric, for example, hasover six earnings numbers.The gap between reportedearnings and the officialGAAP profits is nowaround 30%, accordingto Morgan Stanley thewidest it has been since2009. So investors inAmerican firms should takethe profit figures with ahefty pinch of salt.

Recommended

Get set for another debt binge as real interest rates fall
UK Economy

Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.
15 May 2022
Interest-rate rises mean more pain for stocks
Stockmarkets

Interest-rate rises mean more pain for stocks

Interest rates are rising around the world as central banks try to get inflation under control. That’s hitting stockmarkets – and there is more pain t…
13 May 2022
Anna Macdonald and Mikhail Zverev: Investing in innovative new frontiers
Investment strategy

Anna Macdonald and Mikhail Zverev: Investing in innovative new frontiers

Merryn talks to Anna Macdonald and Mikhail Zverev of Amati about investing in growth-focused innovation in the teeth of a tech-stock selloff, and the …
12 May 2022
The tech-stock bubble has burst – but I still want a Peloton
Stockmarkets

The tech-stock bubble has burst – but I still want a Peloton

Peloton was one of the big winners from the Covid tech boom. But it's fallen over 90% as the tech stock bubble bursts and and everything else falls in…
11 May 2022

Most Popular

High inflation will fade – here’s why
Inflation

High inflation will fade – here’s why

Many people expect high inflation to persist for a long time. But that might not be true, says Max King. Inflation may fall faster than expected – and…
13 May 2022
Cryptocurrencies are crashing – so how low will bitcoin go?
Bitcoin & crypto

Cryptocurrencies are crashing – so how low will bitcoin go?

The entire cryptocurrency sector is crashing, with bitcoin now well below $30,000. This is big, says Dominic Frisby. So just how low could bitcoin go?
12 May 2022
What the Ukraine crisis might mean for ESG investing
Advertisement Feature

What the Ukraine crisis might mean for ESG investing

The Ukraine crisis has brought many of the issues around ESG investing into sharper focus. Where does the sector go from here?
3 May 2022