October was a pretty good month, all things considered, for economic data out of Europe. Industrial production out of Germany, Italy, France and for the Euro-Area aggregate all surprised to the upside. Trade data out of Germany and France was also more positive than most pundits were expecting. All in all, third quarter GDP looks like it accelerated in the last month of the quarter and the outlook for fourth quarter GDP is continuing that trend as well. Cyclical stocks out of Europe seem to have predicted this cyclical improvement in economic data as these stocks have bounced backed since July. On an equal-weighted, USD basis, cyclical stocks have outperformed the MSCI World Index by roughly 9% since the middle of July. And with the latest manufacturing PMI release for the Euro Zone clocking in at a multi-year high of 53.90, it seems that European cyclical stocks could have further to gain.
Gates Capital: Why (Free) Cash (Flow) Is King
Gates Capital Management's ECF value fund has earned strong returns for investors since its inception in June 1996. The ECF, or Excess Cash Flow Fund, had returned 12.9% annualized since inception to the end of September 2020. That was compared to 8.9% for the S&P 500 total return index and 7.4% for the HFRI Event-Driven Read More