"Rudy! If Europe is in such bad shape, why am I getting slaughtered by the euro?"
That’s what an associate roared at me a few days ago, give or take a few colorful words about his accounts that I can’t print here! Beyond a couple of expletives I don’t think I’ve ever heard before, my colleague’s outburst made an interesting point.
His wife left for an extended trip to the Continent a few weeks ago — just as the European currency moved over 1.38 during the U.S. government shutdown/debt ceiling crisis.
For the last couple of years, the euro exchange rate had been range-bound between the high-1.20s to low-1.30s per euro, except for some panic dips during Europe’s sovereign-debt crisis.
My associate’s skill in the securities markets didn’t work with the European currency. He exchanged greenbacks to give his spouse some European cash right at the 1.38 peak.
The rate subsequently fell back as low as the 1.33 area as U.S. political issues improved, economic data strengthened and the European Central Bank unexpectedly sliced its benchmark interest rate to 0.25%.
Even so, my associate still moans about making another dollar-to-euro injection to maintain his mate’s cash on hand.
I think my colleague is onto something: If Europe is in bad shape, as many observers claim, why is its currency so firm?
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I’m not complaining, mind you. All the negative comments are building blocks in the proverbial "wall of worry" bull markets love to climb. My message to European economic progress-deniers: Keep worrying! You can help drive the region’s stock markets even higher.
Some of these same pundits were similarly negative on U.S. stocks not that long ago. Yet here we are. Most major equity benchmarks are up well over 100% from their 2008-’09 troughs.
7 Ways to Cross the Pond
Last week, I explained why I’m going against my own intuition to explore investment opportunities in Europe. I said I’m watching for evidence Europe’s economy is in a sustainable expansion, and named some relatively conservative European dividend plays.
Today I have another conservative way you can start approaching European stocks. The table below lists seven U.S.-domiciled corporations that derive between 40% and 60% of their respective annual revenues from Europe.
This intriguing collection includes …
- Two fast food and snack food giants,
- A brewer whose offerings are Canadian and U.S. favorites,
- A top financial services firm, and …
- A trio of other diversified offerings.
7 U.S. Companies That Like Doing Business in Europe
In addition to their heavy reliance on Europe, these stocks — Molson Coors (TAP), AptarGroup (ATR), Mondelez International (MDLZ), Bristow Group (BRS), EnerSys (ENS), BGC Partners (BGCP) and McDonald’s (MCD) — all have annual revenue and total market capitalizations of at least $1 billion each.
2 Tips from Across the Pond …
My associate’s wife went to a section of Barcelona she last visited two years ago. She reports it has since evolved into a distinctly more-upscale area, a change even more striking from an earlier visit in 2010.
Economists would call that observation extremely limited, anecdotal and statistically insignificant. Perhaps so — but Spain is in "chronically troubled" Southern Europe.
The news that a major part of a major city has grown steadily wealthier doesn’t fit the usual narrative. Maybe this anecdote is a useful clue.
Here’s a second possible clue …
While deflation fears supposedly motivated last week’s ECB rate cut, my colleague’s wife reports prices are no lower than her previous visits.
Again, this is a limited and unscientific observation. Nevertheless, my associate detects absolutely no evidence of any deflationary trend in his wife’s European spending ability. He fears she may be trying to singlehandedly revive the Continent’s economy!
I’ll look anywhere to identify trends my Global Trend Trader can turn into profits — even observations from a single traveler.
I’m not ready to go all-in on Europe as an investment destination, but I’m looking and listening. I recommend that you consider doing the same.
P.S. James DiGeorgia and Geoff Garbacz were able to post 16-straight winning trades for over 293% in cumulative gains using their brand-new trading methodology that they are unveiling today!
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