Is the European Crisis Really over ?
As per my previous optimistic assessment Greece has avoided a catastrophic default and will soon receive the 130 billion second aid tomorrow.
But is it really the end of the European crisis ? We can only answer with both a yes and a no. Yes because the risk of the Euro disappearance is now minimal. As the crisis started as a banking crisis but well linked to a Sovereign Debt one it has also ended with the unlimited injection of funds from the ECB that, as I said in December, would make the sovereign debt carry trade simply too irresistible to pass on.
No in the sense that implementation risk exists not only in Greece but in bigger European economies like in the case of Spain that recently announced their new deficit target of 5.8% vs. the previously announced 4.4%. This is the result of economies struggling to grow within the austerity. High unemployment in several European economies remains another major issue.
So in short for investors the risk of a disintegration of the Euro is now highly reduced and all should be back to normal or, until the next round of European summits !
Hunting for Growth in the Cloud
Among the interesting opportunities for investors I see cloud computing and software as a service as one of the high growth area that will change the way both consumers and companies use computers. Companies like Amazon, IBM, Apple and Microsoft have the lead in this sector that is expected to grow very fast in the upcoming years. An IDC report commissioned by Microsoft and released this month forecasts that cloud computing will create 14 million jobs globally by 2015.
Growth in Luxury
Another high growth sector where European companies have a strong position is luxury. Since my recommendation last November European luxury companies have continued to produce excellent results. The raise of "new middle class" in Emerging markets will fuel continuous growth in this sector that has very unique barriersof entry and where, creating a new brand, is extremely difficult. For example Salvatore Ferragamo (that I recommended immediately after the IPO) returned 50% in less than a year and was practically immune from the Sovereign debt crisis.