ECB embarks on reflationary path

Europe's stock markets are being pulled in different directions by opposing forces. Pulling in one direction is the prospect of a worldwide easing in monetary conditions; pulling in the other is the deteriorating trend in companies' earnings. In the past, the direction of interest rates and inflation have proved more important for equity investors than the direction of earnings. So we can expect the trend in the revisions of corporate earnings in Europe to follow that of the US. There, 70% of all revisions until the middle of 2000 were upgrades, before the proportion plummeted to 28% by...