Below we update the chart of PMIs (Manufacturing and Services) for the month of January -- the Eurozone aggregate continues its bullish outlook in expansionary territory above the 50 line.

From a research perspective, we continue to see strong European PMIs, a reduction in sovereign debt levels, and outperformance from the periphery (of note is Spain) as continuing signals that support our Q4 2013 and Q1 2014 macro themes of #EuroBulls and #GrowthDivergences, respectively, that forecast a bullish growth recovery in Europe, specifically with a bullish outlook for UK and German equities and the British Pound vs the USD.

While our research view remains intact, we want to make note that our fundamental view has currently diverged from our quantitative view with key signals coming from the TREND lines in the DAX and Russian equities breaking down.  While we’ve favored European equities over U.S. equities on the margin in 2014, the signal here trumps the research and so we are not invested in European equities in our Real-Time Alerts Portfolio.


As the signals change, we change. It’s after all not always the case that our fundamental view matches our quantitative view… and we’re fine with that. Managing risk is dynamic.  

European Research Bullish; Quant Bearish - aa. pmis

Matthew Hedrick

Associate