The second requirement is to look at interest rates

Approach to the end of the year and the stock market probes appear. A preliminary observation is required: the 2006 vintage was of excellent quality, both in the United States and Europe. All main actions of the world markets end the year on annual progressions of their indices to two digits. The Dow Jones and returned for the first time since 2003 with a more than 10 increase. Is the same for the expanded Wall Street indicator, the Standard & Poor's 500.

However, the deceleration is patent on the Continent. In 2005, the index DJ Euro Stoxx 50 first capitalization in the euro area had jumped 21 percent. In 2006, the increase should highlight half less, around 10. However, the good conduct of European places is even more meritorious that the single European currency is appreciated by more than 10 against the dollar. "Unlike their American competitors, European groups are more sensitive to international growth." The dependence of the global economy of the results of the S & P 500 companies was only 55. "In contrast, profits are correlated to the national economy of 22, 2 times more than in Europe", explained in the "Echos", end of September, Jean-Luc Buchalet, founder of Pythagoras Corporation and responsible for the investment strategy of FactSet. "Some 70 of the benefits of the broad index MSCI Europe growth can be explained by global growth." "By contrast, European companies are at 10 of their profits to sales in their home markets", then completed the strategist.

Favourable credit policy

How do we explain the tremendous strength of European groups The answer always lies on the evolution of the benefits: "consensus FactSet JCF anticipates an increase to 2 digits on the DJ Euro Stoxx ( 13.1) and the DJ Stoxx 600 ( 13.7). ", indicates the Parisian expert. "We are not seeing, for the moment, no revision to the decline in results in 2006, although instead." "For the moment, the current economic downturn does not translate by a deceleration of the profits of Western companies", see Jean-Luc Buchalet.

This decoupling certainly temporary between micro- and macroeconomics has created the first condition of the flight deck of the revaluations in 2006. The second requirement is to look at interest rates. The Federal Reserve stopped tightening its credit policy, thus avoiding to seize the powerful flow of liquidity which irrigated the stock markets. The rise in long-term rates was confined for the most part, in the first half. "Climate on the bond markets improved in the second part of the year", confirms Eric Tazé-Bernard, Director of the portfolios in Invesco Asset Management.

2007: price volatility

The last item that is conducive to the strengthening of the course was probably the relative lull on several mineral resources and markets, in particular, of the energy markets. After tutoyé, beginning of August, 80 dollars a barrel, crude quality WTI oil marketed in the United States returned to 60 dollars barrel using both a mild winter in the northern hemisphere and the ongoing economic weakening. His withdrawal away the prospect of a runaway inflation. As a result, the major central banks have slowed or stopped the process of hardening of their monetary policies.

Most likely, this almost perfect scenario will change in 2007. The volatility of the course, very low this year, will increase next year "due to the slowdown in the United States", predict the strategists at HSBC. In 2007, "global economies will erode profits more than expected the market", they warn.

The question then is whether if the shares remain cheap enough to allow the continuation of the rally despite profits below expectations. "The shares remain cheaper than credit", provide the strategists of the British Bank. This observation will be sufficient to convince investors to focus again on the stock market In the State, nothing is less sure. In absolute terms, in fact, actions cannot be considered cheap by comparing them with valuation multiples of the 1990, before the stock market bubble burst.