Indeed, the worst that occurred were some suspect corporate results in the US (brushed off with barely a whimper) and some overdue profit taking in Japan.
Forget those side-stories though, the big news was in Europe where all signs are now pointing to il grande recessione being in its final countdown. Surely it was no coincidence that I was being financially molested by our Tuscan and Roman friends at the time.
I was beginning to worry that we would have to start prostrating ourselves upon the carpet of shame to get a good kicking over our forecasts that Europe would return to growth in the second half of 2013.
Lonely view
Indeed, a recent press event with celebrated peers reminded me that our’s was still a lonely view. Last week though saw a belated return to growth in the European manufacturing sector, driven primarily by the Teutonic heavyweight, but aided by an improving delta in the peripheral problem children.
Indeed, the periphery has made significant steps back towards growth over the recent months (see Chart 1 below). This data point was extremely important as it was the first time that it had shown growth in manufacturing in 24 long and painful months.
It is not just in manufacturing that we have seen growth, as the services sector data (see Chart 2 above) is also hinting that the European recovery is balanced and broad based, aided no doubt by better bank lending data, a general easing of financial conditions and Mario Draghi’s OMT (Outright Monetary Transactions) bazooka threat.
There is the possibility that increased confidence could lead to better consumption and therefore higher levels of activity. A positive feedback loop in Europe? Has the superb Chianti Rufina got to me? Am I still drunk enough to state that European growth of 2% is possible in 2014? Yes, I can.
Froome to the finish
Pent-up demand and a retardant replacement cycle could be vital drivers for Europe next year and beyond.
This is of course massively important for the UK economy too, given it is our major trading partner. The UK looks well placed for a period of strong growth, which could be very well timed ahead of the 2015 election.
With European equities the laggard in 2013 there is a strong chance that they will storm Froome-like to the front of the pack and lead global markets in the second half of the year.
Sadly European equities are not wildly cheap and some have performed well, (notably our best performing investment over the last month has been our Europe-dominated R&M World Recovery fund), but nor are they very expensive, particularly when juxtaposed with the much-loved US.
The hunt for opportunities in Europe is stepping up a gear.
