A higher allocation of funds to the resources sector continues to depend critically on evidence of an acceleration in global economic activity
A higher allocation of funds to the resources sector continues to depend critically on evidence of an acceleration in global economic activity. Within the context, signs of a revitalising European recovery provide some evidence of an important change of pace emanating from that region. The chart shows the growth in euro money supply (M3) based on statistics released by the European Central Bank yesterday. The February monthly growth rate was the highest since 2008. The money supply increase is a necessary but not sufficient condition for an acceleration in economic activity. The asset buying program conducted by the ECB will create an environment for an improvement in growth but, as in the USA, purchases of financial assets do not of themselves lead to stronger activity. In Europe, still relatively tight lending conditions and low inflation as well as uncertainties about future demand are hindering the speed of the connection.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
No areas of expertise