Commentary
Investor sentiment is clearly bullish. The CNN Fear and Greed Index for June 18, 2023, stood at 82, which signals “extreme greed.” This is a drastic, optimistic move after closing at “greed” (56 over 100) a month before and “extreme fear” (17 over 100) only one year ago. However, in the same period, the Citi global economic surprise index has declined 12 points, with the eurozone component collapsing 123 points. The U.S. economic surprise index has also declined by 13 points.
The disastrous performance of the eurozone, which fell into recession in the first quarter, is also happening while this economic region enjoys significant tailwinds: declining energy and commodity prices have supported the euro area’s GDP, boosting the external component thanks to meaningfully lower imports. Furthermore, the eurozone should benefit from the expected positive impact of the massive EU Next Generation stimulus plan. None of those effects have helped, however, which proves yet again that massive government stimulus plans hardly boost growth and productivity and are often directed to politically favored sectors with little real impact on jobs or growth….