Eurozone's disappointing streak of economic data is good news, according to Citigroup's strategist Jonathan Stubbs
Stubbs makes reference to the Citi economic surprise index as an indicator to enter into long positions in European equities.
He argues that with the index down to almost -90, it is at levels that historically presage gains in stocks - saying that the average one-year return for the Stoxx 600 index is about 20% following breaches past -70.
"A fall below the -70 level has been a strong buy signal for investors over the last 15 years, with one exception: 2008", he says. Adding that investors should "raise exposure or go overweight cyclicals, financials, value and high-risk stocks".
Barring the exception in 2008, Stubbs argues that 14 out of 15 times the Citi economic surprise index slumped below -70, it has provided a buying opportunity.
Well, that's a recommendation that is a little out there for the time being. The recent slowdown in Eurozone data certainly hasn't done much to hurt the euro, but European equities are mostly in the red to start the year so far.
Eurostoxx is down by 2.4% and Germany's DAX is down by 5.0% so far this year.
