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Koefoed: Why the US gets my money despite better news from Europe

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A sigh of relief in the Euro area this Thursday as PMI figures show the overall level of manufacturing output has increased to 50.7. Most of this is down to Germany which has beaten expectations and bounced back after its disappointing summer to 51.8. Saxo’s Mads Koefoed believes there was an over-reaction to the poor data coming out of the country in August. He points out that the unemployment rate is low while real wages are growing and the debt level is relatively low.

France, however, is a different story. The country has experienced another contraction in private sector activity. PMI manufacturing fell 1.5 to 47.3. Koefoed believes the consensus forecast for 2015 and even heading into 2016 is too optimistic. He says 0.5% is the figure to expect and that’s down to the lack of structural reforms. Unemployment is still too high and Koefoed says the country is still struggling with an inflexible labour market.

So where to invest? Koefoed believes there’s little profit to be made in European equities so instead investors should look towards the USA. He highlights the American technology sector and in particular Apple, Microsoft and Amazon.