Don't worry about a Greek tragedy, focus on Spain
As the global markets battle fears of a Greek tragedy, is one of the original PIIGS, Spain - really the country that should be in focus?
Investors are on edge as the June 5th deadline for Greece to make a debt payment to the International Monetary Fund inches closer. The country must make a payment of 300 million euros, just the first drop in a 1.6 billion euro bucket.
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European officials' attempt to stimulate its economy with QE seems to have at least one winner – Spain, according to Bill Stone, the Chief Investment Strategist at PNC Financial. “Spain was a lot of what was troubling Europe and it seems to have gotten better and it matters.”
It matters because, Stone believes, Spain is a “harbinger of how overall Europe goes.”
Stone backs his bullish call by referencing “one area we can point to as proof of the success in Spain, is its GDP, which has posted seven consecutive quarters of growth. After lagging the Eurozone in GDP growth, Spain’s GDP growth has outperformed since second quarter 2014.”
The same culprit that brought the American economy to its knees is blamed for bringing down Spain and that’s housing. But Stone said “it looks like…there’s been an adjustment in the housing market and they’ve made other structural reforms and it looks like it’s put them on good footing now.”
In regards to Europe overall, Stone acknowledged, “Eurozone on a relative basis, it’s way better. On an absolute, it certainly has a lot of ways to go.”
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