SO?

If you're the type of  investor who can look ahead and block out much of the nasty sounding news, and there seems a lot around these days, you might want to consider placing some bets where others are avoiding.

One of  those places might be Europe. The news is out about the EU's three largest economies being in a funk. And along with building suspicion about the weakness of EU banks amid rumors the ECB will soon unravel some form of American-style QE, there's enough gloom to go around for nearly everyone.

We all know what QE or easy money does to asset prices. The assumption that this money will find its way to where it's intended, should QE happen, is just that--an assumption. Even before the recent Russian sanctions were imposed, Europe's economy was anemic. 

A weaker euro and a stronger dollar will help EU exports. And higher US interest rates once they arrive will also help. A story headline in today's Financial Times, "Fears rise as headwinds hit Europe's equity rally," lists all the negatives while also noting that since September of 2011 the FTSE Eurofirst 300 to this July had rallied 60 percent. 

Even basic arithmetic tells you that's better than a 20 percent annual average in less than three years. 

Another area we like and continue to like is energy with its recent weakness. Earlier we wrote about a pullback coming there and we have not changed our minds. Trouble in this sector is good for prices all the while trouble in the EU is viewed as being bad for prices.

What's being priced in to both right now is economic slowdowns. And it appears widespread with only China showing much positive news. So? 

Catalysts like everything else in life come and go. A while back we mentioned how investors were avoiding gold mining stocks. Commodity prices have softened, but apparently bad news hasn't. A correction is one thing, a nasty old bear market another.

One is overdue, the other down the road somewhere. 
t. man hatter