Email of the day (3)
Comment of the Day

November 15 2011

Commentary by David Fuller

Email of the day (3)

More on Don Coxe and the euro:
"Thank you both for the very helpful reply to my Don Coxe Euro outlook query, much appreciated.

"Looking back at my request, I can see that I failed to convey my central question adequately, so, if you have time, here it is…'do you think we need to see a weaker Euro before we can look forward to a reliable bull run in equities' ?"

David Fuller's view You are most welcome and I think we were both too interested in other aspects of your earlier email to remember the question above.

No, I do not think we need to see a weaker euro before we can look forward to a reliable bull run in equities. That is just a theory. The next significant rally may or may not coincide with a weaker euro but there are more important influences.

It is the fear of economic contagion spreading from theoretical European bank failures and even the break up of the euro that has spooked many investors around the globe. Therefore a weaker euro, while perhaps justifiable fundamentally and therefore helpful for the less competitive European economies, could even exacerbate anxieties among global investors.

What we may need for the next good stock market rally, in my opinion, is a justifiable consensus that Europe's problems are both contained and in the process of being resolved, however slowly, thus reducing the risk of collapse and contagion. The next most important catalyst, I maintain, would be clear evidence that growth economies are adopting more stimulative monetary policies. To this end, lower oil prices would help but they remain firm at present (WTI & Brent).

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