- Europe and China: Are they done going down?; and
- What does it take to stop a cult stock?
Once Again, the Turnaround Is Real Posted at 2:18 p.m. EDT on Friday, Aug. 9 Europe and China: Where are they? Are they done going down? Can they be counted on for tailwinds in the third and fourth quarters? Or will they remain headwinds? Isn't that how you feel on days like today? The market got hammered and then buyers came in, in part because of a sense of worldwide optimism. One thing's for certain: The European markets have been runaways since the S&P 500's bottom: Markets in Spain, Greece, Italy, France, the Netherlands, Ireland, Portugal and Switzerland are all up double digits since the beginning of the summer. That's pretty amazing. I simply do not believe you can get this kind of recovery in these stock markets without something positive and lasting going on. Now, we have ample evidence that Europe's been bottoming. We have no evidence of Europe actually improving in a sustainable fashion. We mostly have a cessation of job loss. However, was it any different when the U.S. market bottomed? Our stock market took off while the skeptics whined on and on that it wasn't for real, that it was all made with job cuts and flat revenue, particularly for the international companies. That said, you could argue that the European snap-back will be bigger than ours for the bottom line, because our companies made huge jobs cuts worldwide -- so any cessation of revenue loss is a big deal. Four groups could benefit dramatically: the international banks, the techs, industrials and the autos. Secondarily, the beverages, discretionary healthcare plays and even the packaged-goods outfits would see some year-over-year benefit.