Merrill hæfter sig i en analyse ved, at europæisk økonomi er på vej fremad og klarer sig godt i forhold til USA, og det skyldes ikke mindst EU’s nye fond, men også, at europæerne fik slået første bølge af coronavirussen mere effektivt ned end USA. Det betyder også, at euroen er blevet styrket over for dollaren, og enhver tvivl om euroens holdbarhed er nu skubbet til side.
Uddrag fra Merrill:
Europe Poised to Catch Up
The more intense first-wave impact in Europe compared to the U.S. arguably explains part of its bigger second-quarter GDP decline. Perhaps just as significant is the 3 of 8 August 10, 2020 – Capital Market Outlook
different policy response in the U.S. compared to the European Union (EU).
Both fiscal and monetary policy have been much more timely and aggressive in the U.S. than in the Eurozone, which has been hamstrung by the absence of a unified fiscal authority.
Individual European countries had to do what they could given the bloc’s constraints on national budgets. This “every country for itself” approach helped fill some of the void created by the shutdowns, but it was much more limited than the U.S. fiscal surge, which managed to replace lost wages in real time to such a complete extent that this was the first recession in history with rising disposable personal income.
The bigger U.S. income-replacement policy has supported consumer spending and is a major reason why the loss of consumer confidence has been more muted in this recession compared to the 2008/2009 Great Financial Crisis, when the income losses were severe and unemployment was seen as more lasting.
The fiscal response in that episode was passed in dribs and drabs over years. This time, unprecedented income replacement happened in real time to such an extent that a University of Chicago study estimates that almost 70% of unemployed workers were receiving more while unemployed than they were making while working before the pandemic.
This massive front-loaded U.S. fiscal thrust stands in sharp contrast to the more delayed EU fiscal response. Recognizing the shortcomings of their fiscal effort, EU leaders finally agreed to create an EU-wide borrowing facility, something that Germany and other Northern European countries had resisted for decades.
The large, newly approved fiscal support will be released over the next few years. As a result, despite a harder initial pandemic experience and weaker policy response to date, the EU is looking at a future with more widespread fiscal support and less restraints from the pandemic, at least as it appears now.
These positive developments have caused a major technical breakout of the Euro from about 1.08 dollars per euro before the pandemic to just shy of 1.20 recently. Indeed, before this new fiscal authority, there was a widespread view that the Euro could not last as a viable currency given the high risk that long-suffering southern members might decide that the cost of being a Eurozone member outweighed the benefits.
As hard-hit southern member states will benefit disproportionately from the new EU fiscal stimulus, that risk has considerably diminished. The reduced risk of a Euro breakup is a powerful force for a stronger currency and a stronger European and global economy.
Perhaps equally important as the Euro’s newfound strength is the more general weakening of the dollar against most other currencies. The strong dollar of the past decade was the direct result of relatively stronger U.S. growth and higher U.S. interest rates.
The Fed had more scope to cut rates in response to the global shutdown
recession, and policymakers have made it clear that they plan to “err on the side of ease” for the indefinite future. This abundant liquidity is typical in the early stage of a new business recovery.
In short, both recent U.S. and European developments favor a stronger Euro and relatively better Eurozone growth. While the U.S. equity market has generally outperformed over the past decade, we may be witnessing a major shift with EU equities now able to hold their own.
