If you ignore the ongoing Greek sideshow, rarely has European money growth been as accommodative as it is today. Europe has enormous structural problems of too much debt, an inflexible currency and an ageing population, but cyclical factors are very positive. Leading indicators are also positive, and the problems in Greece practically guarantee that the ECB will remain extremely accommodative even though Germany will require some tapering of QE. Barring major contagion from Greece, any equity weakness in Europe will represent a buying opportunity. Real M1 in Europe is growing at 11%, and the collapse in the price of oil means that excess liquidity is surging now and is as high as it was in 2009 and higher than it was in 2004-05.
While investors are worried about the fallout from Greece on the European banking system, we offer the next chart to show that excess liquidity is still extremely positive for European banking stocks.