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Regional Specialists Review February 2015

Overview: If it’s not one thing, it’s another.

In our November edition we described how growth concerns in China and Europe and commodity price weakness had some investors in a tizzy, which nonetheless did not prevent U.S. stock prices from rebounding to record levels shortly thereafter.
 
Fast forward to today, and we seem to have hit replay. The triggers for volatility are both the same and different – inflation has morphed to near-deflation seemingly everywhere and Greece is now back in the news for its annual tragedy. Its new leftist government is threatening to rip up previous agreements with its lenders, the hated Troika, which are the only entities allowing the Greek government to “make payroll”. But the result is remarkably similar – after nervousness and pullbacks, U.S. stocks have just hit new highs.

But U.S. earnings growth has slowed and profit margin peaks should be behind us. Ironically, sharp gains in employment may be contributing to this. Greece could well leave the Euro if it's not bluffing. European growth is anemic. Many emerging nations’ debt may be downgraded. So, plus ca change….

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