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Joe Barbieri has Bachelors' degrees in both Civil Engineering and Commerce from the University of Toronto. He has worked in the Financial Services field for over 13 years, with over 10 years on the institutional side of the business. He has covered positions from Fund Accounting to Investment... More
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  • Mixed Signals Coming From Europe? 0 comments
    Jan 11, 2013 4:17 PM

    It is no secret that Europe has been struggling financially over the last few years. The one beacon of consistency has been Germany. They have had low unemployment, high exports and high GDP over the same timeframe. German quality is sought for around the world, and it has been said that higher quality keeps customers coming back and is difficult to undercut or copy. Is this story going to last? German labour costs are creeping up, and other Euro countries costs are coming down. This would be expected after all of the austerity measures happening in the Eurozone. The German economy is also starting to slow down under the weight of the world slowdown.(1) There also seems to be a trend towards a strengthening Eurozone as evidenced by a lack of will to lower interest rates and a more upbeat forecast for the Euro economy. This is quite difficult to believe given the crises of the last few years. (2)(3)

    The counterargument to these points is that forecasts can be quite wrong, and these are early days. Is this a case of the efficiency being transferred from Germany to the rest of Europe due to economics? Would a German slowdown be neutralized by a recovery in the poorer countries in the Eurozone? It is very early to know what happens and if these are in fact true signals. It seems as though there is change in the air, and a passing of the baton. The effect can go in any direction.





    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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