Positions in Europe: Long British Pound (FXB); Short Spain (EWP)
We’ve been calling for some of the high frequency data in Europe to slow on the margin. Today’s release of Manufacturing PMI from the 16 European countries that reported is quite telling: only 2 countries saw an improvement in the number month-to-month, while 14 declined (see chart below).
We remain long the British Pound via the etf FXB and short Spain (EWP) in the Hedgeye Virtual Portfolio. We continue to like countries such as Germany and Sweden due to their fiscal strength and strong export base, but remain generally cautious on the region due to ever-present sovereign debt contagion threats.