Hedgeye Portfolio: Short Italy (EWI); Long Germany (EWG); Long British Pound (FXB)
“Get up and Strike, Europe” or at least that seems to be the message today, with an estimated 50,000 people across the region standing against government-sponsored austerity measures to trim public debt and deficits. Certainly we believe it’s important to note a coordinated strike across Europe against austerity (which weighed on equity markets today and pushed up bond yields), however, we’re quick to note two points to keep this strike in perspective: 1.) you can bet this won’t be the last strike in Europe over austerity, and 2.) strikers will remain a small minority of the population = we’re not talking about economies grinding to a halt during strikes.
We’d direct you to our website (www.hedgeye.com) to read more of our work on the implications of austerity in Europe. In short, our position remains that we’re bullish from a top-down perspective on countries that issue austerity measures to clean up their fiscal houses. That said, fiscal trimming will not be a panacea across Europe to cure its ails. We see clear divergence among countries; we are bullish on Germany and continue to warn of further deterioration in the capital markets of countries like Portugal, Ireland, Italy, Greece, and Spain.
Below we show graphically the data out today from Europe, with minimal commentary included, to keep the dialogue open on our positioning in Europe.