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There does appear to be some irrational exuberance over in Europe. One of the greatest dichotomies in the global bull market in stocks is the stellar performance of European equity prices despite the ongoing recession in the euro zone. The MSCI Europe stock price index is up 81.2% since March 9, 2009 to a new cyclical high. The euro zone’s real GDP is down 1.5% over the past six quarters. It’s hard to imagine that investors are turning more optimistic on the future over there. For now, it still looks to be mostly a relief rally. Stocks have risen in Europe mostly on relief that the ECB has averted a Lehman-style financial meltdown, so far. Monday’s FT included an article titled, “Wall of money eases Eurozone funding.” The print version of the same story yesterday was titled, "Eurozone makes hay while bond market shines.” It notes: “Encouraged by low market borrowing costs and strong investor demand, finance ministries are further ahead in funding programmes than at this stage in at least the past three years. France, Spain, Italy, Belgium and the Netherlands have raised more than half the year’s expected total, according to estimates by Barclays." That’s even though the region is in the worst recession since the monetary union started in 1999.
Investors are clearly reaching for yield all around the world, including in the peripheral countries of the euro zone. The FT reports: “When Spain last week issued 10-year bonds, demand was three times greater than the €7bn raised. Italy raised €6bn from 30-year bonds, the first with such a long maturity since 2009. Earlier this month, Portugal issued €3bn of new 10-year bonds, its first since the country requested an international bailout programme two years ago.”
Today's Morning Briefing: Group Hug. (1) One of the greatest relief rallies on record. (2) The Bullish Strategists Society. (3) Another 2-4 years for the bull? (4) Starting to believe in tomorrow again. (5) Irrational exuberance or rational relief in Europe? (6) Making hay in Europe’s bond market. (7) Not all profit margins have peaked. (More for subscribers.)
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REUTERS/Gary CameronGood morning. Here's what you need to know. Markets in Asia were mixed in overnight trading. The Japanese Nikkei rose 1.6%, but the Hong Kong Hang Seng fell 0.5% and the Shanghai Composite retreated 0.1%. European markets are in the red across the board, with Spain down 0.9%. In the United States, futures point to a positive open.Beginning at 10 AM ET, Federal Reserve Chairman Ben Bernanke will deliver a testimony before the Joint Economic Committee of Congress. Bernanke may be questioned about the recent uninterrupted rise in the stock market and whether Federal Reserve policies are creating a bubble.At 2 PM ET, the Federal Reserve will release the minutes from the FOMC's April 30-May 1 monetary policy meeting. The big debate in the markets over the past two weeks or so has been whether the Fed could taper off bond purchases sooner than markets expect, so any discussion in the minutes that sheds light on this will be of interest.The Bank of Japan elected to keep monetary policy unchanged as expected at its May policy meeting after launching an unprecedented bond buying program in April. BoJ Governor Haruhiko Kuroda acknowledged recent improvements in Japanese economic data, and said of the recent volatility in the Japanese government bond market, "At this point, I don’t think [recent JGB yield rises] will have a large impact on the real economy."The release of the minutes from the Bank of England's May 8-9 monetary policy meeting revealed that the central bank's Monetary Policy Committee remained split 6-3 against re-starting the BoE's bond buying program in order to bolster its commitment to bringing down inflation. BoE Governor Mervyn King will chair one more monthly meeting before incoming Governor Mark Carney takes over at the end of June.The U.K. reported disappointing retail sales data for April this morning. Sales fell 1.4% last month after contracting 0.7% the month before. Economists were expecting sales to rise 0.1%.Home improvement retailer Lowe's reported first quarter earnings of $0.49 per share, below analysts' consensus estimate for $0.51. Sales of $13.15 billion during the quarter also fell short of estimates, which were for $13.45 billion. The company blamed the miss on bad weather. Shares are down 4.4% in pre-market trading.Ford Motor says it will expand production at its North American plants by 200,000 units in 2013 by expanding production lines and shortening its summer shutdown by a week at many locations. The move marks a turnaround in an auto industry that has had to close plants and decrease production several times in recent years.Sony's board of directors is discussing a plan to spin off part of its film and music arm submitted by hedge fund manager Dan Loeb, the company's largest investor. Loeb proposes that Sony spin off 15-20% of the film/music business into a separately-listed public company, using the proceeds from the share sale to bolster its struggling consumer electronics business.Existing home sales data for April are due out in the U.S. at 10 AM ET. Economists expect the release to reveal that sales rose 1.4% in April after contracting 0.6% in March. Follow the data LIVE on Business Insider >Please Note: Business Insider will never share your information with any other companies. You also have the ability to unsubscribe from these newsletters at any time simply by following the unsubscribe link located at the bottom of each email 
