The 16-nation eurozone has finally emerged from its recession on the strength of export growth in its largest economy, Germany. There are single-country and broad ETFs to play this positive development.

After feeling the effects of the financial crisis, the European economy is out of a negative growth pattern, boasting 0.4% growth in the third quarter. Matthew Saltmarsh for The New York Times reports that other factors that signal a turnaround include a stronger currency and growth in countries such as Germany and France.

Can't you just see it?

According to Eurostat in both the euro area (EA16) and the EU27, the seasonally adjusted household saving rate continued to increase and the household investment rate to decrease n the second quarter of 2009. In both regions the fall in business investment rates and profit shares continued, though at a lower rate. In the second quarter of 2009, the seasonally adjusted gross saving rate of households was 14.4% in the EU27 compared with 13.5% in the first quarter of 2009. In the euro area, the household savings rate was 16.5% in the second quarter of 2009, compared with 16.0% in the previous quarter. In both cases these were the highest rates recorded since the start of the time series in the first quarter of 1999.

Whoever would have thought that some people once called economics the most dismal of sciences? Certainly, as the current crisis goes on and on, those of us who consider ourselves to be economists scarcely are able to find the time to squeeze in a dull moment, even here and there. But even at a broader level, interest in that most dismal of dismal topics - the theory and practice of central banking - seems now to fire up levels of enthusiasm here in Spain that make even the appetizing prospect of a forthcoming Real Madrid-Barça football match pale in intensity. Even if it is the case, I have to admit, that the everyday Johnny (or Jill) come lately sitting in the bar still - truth be told - prefers the sports columns of the daily newspapers, or the lascivious details of the latest romantic adventure of one of the rich and famous to a careful perusal of the detailed minutes of the last policy rate setting meeting over at the central bank.

The reason for the sudden and unexpected upsurge in interest should, I would have thought, be obvious - since with 85% of Spanish mortgages being variable (and thus determined by the ECB policy rate), and Spain's economy sinking into an ever deeper pit, the impact of the coming decisions (or even the hints at possible future decisions) have entered peoples lives like never before. And this is doubly the case in an environment where - as Bloomberg inform us this morning - central bankers from across the global, from Washington, to Sydney, to Oslo are likely to take increasing account of future accelerations in asset prices in an attempt to avoid repeating policy mistakes that are presumed to have inflated two speculative bubbles in a decade, culminating in the worst financial crisis since the Great Depression.

European stocks and exchange traded funds (ETFs) have benefited from rising investor appetite for risk. Even though there are positive indicators for looking into investing into Europe, an investor should be aware that possible risks still abound.

Analysts are out making the case for Europe to be the next comeback story. Why?

The turmoil that has plagued U.S. equity markets over the last two years will no doubt have several lasting effects. Regulation of the financial sector has been permanently changed. The role of the government in the private sector has been escalated to levels never before imagined. And the wisdom of allocating nearly all of one’s portfolio to U.S. securities has come under heavy fire.

As U.S. investors look to diversify their holdings beyond their borders, many are looking to Asia, where some countries have already begun raising interest rates, to drive a sustained recovery. But a growing number of investors believe European stocks are also poised to rise rapidly over the next two years amidst a recovering economy, increasing corporate earnings, and a favorable monetary policy.

Never mind that you lost money in last year's market. So did Warren Buffett and many other investment legends, publishing losses in the >30% range. But there's always a good thing for some minority in every bear market. If you are European you are now on the top of the world as North America has fallen to #2 in the global comparison of wealth after all markets switched into bear mode after the official beginning of the credit crunch in 2007.

According to a report in EUobserver, my favorite news site for critical EU reporting, Valentina Pop came up with this trend-changing report headlined "Crisis makes Europe richest region in the world, study says." From the article:

Here is a list of 73 exchange traded funds with at least $100 million market-cap, at least $1 million daily Dollar trading volume, and at least 3% annualized last dividend yield.

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According to a recent study, the business expectations in the Eurozone have shot up to their highest levels in two years, adding a certain appeal to ETFs that target the region.

The 16-nation Eurozone’s private sector posted a record move on Friday, and purchasing managers say that the economy stabilized this month. William L. Watts for MarketWatch reports that the preliminary Markit composite purchasing managers’ index for the Eurozone rose to a 15-month high of 50 in August, from 47 in July. The record monthly jump exceeded economists’ expectations for a rise to 48.3.

Indeed, when comparing Q2 of 2009 with the second quarter of 2008, one can easily see that we are still getting a significant 4.6% contraction.

First, let me throw the caveat out that "positive" GDP is not something I'd consider an end to a recession, but the financial press and governments like convenient data points, and Gross Domestic Product is the one they seem to use. Second, while I know most of the tricks inside the US government reporting of GDP, I have no familiarity with what France and Germany do for their GDP report. Third, many of these countries have been running at negative GDP for 3-4 quarters in a row (i.e. the US has printed 4 negative GDP quarters for the first time since the Great Depression), so just from a mechanical perspective, if you go "less bad" over time, the mechanics of GDP reporting mean you turn positive... at least in the US style of reporting, and I am sure most countries adopted somewhat similar framework for their GDP reports.

With those caveats both France and Germany returned to slightly positive GDP growth in the past quarter. Remember all those folks who told us the U.S. was heading first into the recession so would be the first out? Well, they are still the same folks showing up daily on CNBC who never have to answer for being wrong on previous calls. This is thesis # 876 they have gotten wrong but not to worry - as long as they chime in "always buy stocks, stay fully invested, the stock market is the best thing ever in the long run," they keep their slots on TV and no one ever goes back and says "Well Chuck, it looks like in April 2008 you said the US was the first in recession so it would be the first out - do you apologize for being wrong yet again?"

Over the past several months, concerns over the fallout from the massive stimulus plans, rising unemployment, and continued weakness in corporate earnings have left many investors rethinking their allocations to U.S. equities.

Once considered an essential element of any portfolio, American stocks have fallen out of favor with some investors who have shifted assets towards emerging markets and other regions (the number of ex-U.S. ETFs available is a testament to this trend). For investors disillusioned with prospects for American markets but unwilling to take on the risk inherent in emerging and frontier market funds, Europe may present an appealing option.

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Mint.com has produced the below graph depicting the distribution of the world's most important resources (diamonds may not exactly fall into this category).

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Thursday’s New York Times had a piece titled “Europe Lags as U.S. Economy Shows Signs of Recovery“. The gist of the piece was that the European economy was still gloomy and will remain in recession well into 2010, primarily due to differences in policy between the Europeans and Americans in solving the current economic crisis.

The article further added:

Here are the ten ETFs and ETNs with the largest increase in value traded (VT) for the week ending May 15, 2009. The ranking is based on a simple comparison of the five-day average value traded (closing price times volume) versus the 50-day average.

Topping the list this week is SPDR DJ Euro STOXX 50 (FEZ) with a 353% increase in value traded on a -6.3% drop in price. A quick scan of the table reveals that “distribution” was the name of the game this week, as eight of the listed products underwent price declines. Rydex S&P Smallcap 600 Pure Value (RZV), a recent market leader, suffered a -13% haircut.

The contraction in global services activity also seems to be easing up, following the pattern displayed by the manufacturing sector, and the JPMorgan Global Services Business Activity Index rose for the second month running in April, registering at 43.8 its highest level since last September. It is important to keep clearly in mind, however, that the headline index remained well below the critical dividing line of 50 which separates growth from contraction, and thus we are still firmly within global recession territory. So stabilistation in the contraction is not the same thing as recovery.

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The JPMorgan Global Serices Report is based on the results of surveys covering around 3,500 executives in countries which taken together account for an estimated 60% of global service sector output.

Here are the ten ETFs with the largest increase in value traded (VT) for the week ending May 08, 2009.

The ranking is based on a simple comparison of the five-day average value traded (closing price times volume) versus the 50-day average.

Ed Yardeni is president of Yardeni Research Inc., a provider of independent investment strategy research and data. He has worked as chief investment strategist at Deutsche Bank, Prudential Equity Group and Oak Associates. Yardeni has also served as chief economist for C.J. Lawrence, Prudential Securities and E.F. Hutton.

His resume also includes working as an economist with the Federal Reserve Bank of New York. He also held positions at the Federal Reserve Board of Governors and the U.S. Treasury Department.

Eurozone manufacturing and services sectors continued to contract in April, but the rate of decline continued to slow, according to the latest flash readings from the monthly surveys of purchasing managers. The preliminary Markit euro-zone PMI rose to 40.5 from a reading of 38.3 in March, a six-month high. The April services PMI rose to 43.1 from 40.9 in March, exceeding forecasts for a reading of 41.2. April manufacturing PMI rose to 43.1 from 33.9 in March, while expectations were for a reading of 41.2. A figure of less than 50 means a majority of purchasing managers saw a drop in activity, while a reading of more than 50 signals expansion.

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First of all, I hope that our readers have passed a nice couple of days with their families and friends and that they are ready to pick up the baton again here after Easter. One who sadly will not be joining us as we move forward is Greg Newton, author of the blog Naked Shorts, who passed away recently from a heart attack. I shall immediately confess that I only, on rare occasions, stopped by NS to get a dose of the often very sharp pen wielded by Greg. However, with endorsements and fine obits from the likes of Salmon, Cass, and Hempton, I am more than convinced that the econosphere has lost a great presence. My thoughts go out to his friends and family.

Meanwhile here in Denmark, things are definitely getting better. After a March of cold and lots of rain so far in April, the Easter days have, in particular, blessed us with a fabulous couple of days of sun and (relative) warmth. I doubt that the Spring is more beautiful anywhere else in the world than in the North mostly because the change in scenery is so striking. Judging by a number of recent analyses, comments and data points, it is hard to escape the feeling that perhaps, just perhaps, markets are also feeling a bit of spring sensation too even if the signs are most tentative.