IceCap Asset Management letter for June is out. See IceCap Asset Management Letter from May 2013 here (Bernanke’s Frankenstein Is The Stock Market Bubble). The firm covers a variety of topics but their analysis of France is particularly interesting. French President Hollande stated that the Euro crisis is over, but as IceCap notes this seems highly unlikely especially when looking at a chart of French imports and housing prices in the country. Below is a brief excerpt followed by the full report embedded in scribd.
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Francois Hollande on Euro Crisis
Whew – that’s good news. For a while there we thought that maybe the Euro crisis was still lingering. Depending upon your view, it was either a very short or very long 13 months ago when Francois Hollande became the newest President of France. His policies of more spending, more government jobs and more retirement for everyone certainly was the catalyst for him winning more votes. Yet, here we are today and everyone’s favourite socialist leader is quickly becoming the punch line of Europe’s economic joke.
For starters, proclaiming “the worst is over” for Europe is so February. Everyone now knows the latest and coolest slang is an “accelerating recovery”. Yet, everywhere we look in Europe we see few signs of these better times. France specifically is showing no signs of recovery. Often paired with Germany as the economic anchor of the Euro-zone, France was viewed as Europe’s counter balance to Germany’s rigid economic ways. Yet, as economic conditions in France continue to slide, it’s seat at the power table has slid right on over next to the Spanish and Italians. To fully grasp the extent of the French economic slowdown, look no further than the continual decline in year-over-year imports as shown in Chart 3. As well as, another concern which no one talks about is the French housing market. Chart 4 does a terrific job illustrating the struggles in this key component of household wealth.
Europe and especially France continues to struggle. Claims by President Hollande that the crisis is over is an attempt to help both foreign investors and the French public restore confidence in the domestic economy. While currently there is a lull in any crisis news emanating from Europe, investors should prepare for an action packed fall election in Germany as well as the possibility of a summer of student protests.
Despite what Hollande says – the Euro crisis is not over.