In his 2013 outlook, titled In Authorities We (have to) Trust, Deutsche Bank credit strategist Jim Reid warns that Europe is headed for tough times in 2013.
Matthew Boesler at BusinessInsider writes:
Reid highlights three major issues.
To start, European stocks – and stocks in markets around the world, for that matter – are considerably overvalued based on historical correlations to PMI data….
The second problem is austerity. Most accept that austerity measures weigh on economic growth in the short term, yet euro-area governments are moving forward with plans attempting to bring fiscal budgets back into balance anyway.
…. the third problem: namely, that governments have consistently set economic forecasts too high and then failed to meet their own targets.
Read more here Reid: Eurozone’s 2013 Nightmare Scenario | Business Insider.