EDITOR'S LETTERJohn Stepek
The new eurozone panic
Markets finally have something else to panic about other than the plunging oil price. Greece might be ready to walk out on Europe – again. The threat of another eurozone eruption (particularly now that deflation has taken hold region-wide – prices fell by 0.2% yearon- year in December) has sent the euro to a nine-year low against the dollar. Even the apparently unstoppable US S&P 500 market had a grim start to the year, experiencing its longest losing streak since the end of 2013.
Yet our writers Matthew Lynn, James Ferguson and Tim Price all back Europe as a top tip for 2015. And I have to say I agree. If Greece stays, a relief rally ensues. If Greece goes, both Germany and the European Central Bank (ECB) have all the excuse they need to flood the rest of Europe with printed money to stop any panic in its tracks. There might be a fair bit of panic between now and the eventual resolution, but if you’re a long-term investor with an eye for value, Europe looks good. I’ve always liked Italy – accessible via the iShares FTSE MIB (LSE: IMIB) tracker – but for broader access, there’s the TR European Growth Trust (LSE: TRG), which focuses on smaller companies and currently trades on a discount of around 12.5%.
But any sensible contrarian always questions their assumptions – so what could upset our cosy consensus?
• Read the ful editor’s letter here: The new eurozone panic