In the first quarter of 2015, U.S. economic growth came in barely above zero. Similarly, corporate profits have been coming in consistently below estimates.
In both cases, the culprit was the U.S. dollar.
As savvy investors, therefore, we should look to counter this trend. That means searching for investments where currencies have been weak – and where growth and earnings may come in higher than expected.
One region, in particular, provides numerous possibilities for income investors right now, and should definitely not be overlooked…
I’m talking about the eurozone, where prospects have improved recently.
For starters, almost no oil and gas production exists within the eurozone, so the recent decline in oil prices has been economically helpful.
Meanwhile, Greece’s troubles have gotten a lot of press – but the reality is that Greece is a very small part of the eurozone, and it doesn’t much matter whether it stays or goes. Indeed, a “Grexit†would, on balance, be good for the currency, thus improving the discipline of its weaker members and increasing its economic cohesion.
Finally, The Economist‘s team of forecasters estimates growth of 1.4% in 2015 and 1.7% in 2016 for the euro area, which isn’t stellar, but is above the recent average.
Different Strokes for Different Folks
Now, the economies of the eurozone still aren’t integrated like American states, meaning there’s a big difference between the disparate eurozone countries when it comes to the availability of good investments.
In Germany, for example, even the dullest utilities carry yields of only around 3%. That may look attractive to German investors who have to suffer from a domestic 10-year government bond yielding about 0.4%, but it doesn’t suit us red-blooded Americans.
Luckily there are attractive buys in other countries, and we don’t even have to venture into Greece or other areas where the economics are wild and woolly.
