See very positive mood across Eurozone: Lakefield Partners

Bruno Verstraete, Partner, Lakefield Partners in an interview to CNBC-TV18 spoke about the global macro data and the weak China PMI.

Verstraete said the general mood across Eurozone is very positive and expect low euro levels to help earnings and benefit exporters in the zone

Fundamentally according to him euro is still not in the best shape but there is hope that the macro data is likely to be good, so any disappointment on that front could lead to investors taking profit much faster in Europe. " We are a bit sceptical about the hope and the reality whether that can be met at this stage," he added.Below is the transcript of Bruno Verstraete’s interview with Reema Tendulkar and Sumaira Abidi on CNBC-TV18.Reema: Things seem stable across at least the European markets. In fact for the entire week, something like the DAX has seen a rally of close to about 2 percent. The CAC too has been higher by a percent and what is the mood there in the European markets and how can we expect trade to be?A: Yes, the mood at this stage is obviously very enthusiastic. Everyone expects and anticipates even more that the earnings will really benefit from the low euro level and that will of course benefit all of the exporters at this stage. The question that many investors start to wonder is whether the markets have not really outrun themselves and whether the expectations will be able to be met and that caution shows in weak days when markets become more and more volatile but the general mood of course given the low interest levels on cash is still very positive.Sumaira: But do you think that the raft of purchasing managers’ index (PMI) data that is expected today could be a bit of a dampener? Also there is a meeting of the Euro-zone finance ministers as the Greek issue continues to dominate, the Greek prime minister (PM) will be meeting Angela Merkel today as well. How much of a play would these have on trade?A: I believe that markets do exaggerate at this stage because fundamentally Europe is still not in the best shape. It is of course all based on anticipation and on hope but that hope will need to materialise in the fundamental macro data that comes out. And I think any disappointment will be heavily punished in the markets and will cause the investors to take profits much faster in Europe, I believe than in US given that the indices have gone up that much in Europe so far. So, we are a bit sceptical about the hope and the reality whether that can be met at this stage.

Reema: Speaking about the manufacturing data at least for France, the April composite flash PMI has declined on a month-on-month basis. It has come in at 50.2 versus 51.5. What is the key expectation from the Eurozone manufacturing as well as the services PMI? And are we likely to see the benefit of quantitative easing (QE) starting to reflect in the PMI data and if it does not will that be a big disappointment?A: I think it should in a way because we see a bit of better conditions into the credit scene and to the private sector. So, sooner or later that needs to trickle down into the manufacturing data. Here and there you hear very soft spoken positive signals on the economy. Everyone seems to believe that turn around is coming but again it needs to be proven in the numbers. And it needs to be proven and that is really important into all big countries, not just into Germany but also in the weaker countries which have been stagnating at best, such as France, Italy, Spain. These need to benefit from the low euro and from the QE. And that slowly, but surely - of course it takes a few months to see it in the real numbers but that should come soon otherwise again the disappointment and the profit taking will go fast and there will be a huge correction in the European markets, if there is a disappointment.