Ireland just emitted €3,75 Billion of brand new 10 years Debt at 3.6%. In my opinion this is a big success, which will spill over to Greece and Portugal, therefore, symbolically ending the Euro debt crisis. Sooner or later, this will have a positive impact in the valuations of several European banks, supporting a long term bullish view on solid European Banks.

I am anticipating that in the following weeks, Portugal will also emit some kind of sovereign debt in the open market, with some degree of moderate success. This will be the beginning of financial normalization in Europe.

However, there is a very significant risk: deflation. The ECB has shown a more complacent attitude towards the possibility of deflation. I have expressed many times, in this blog, the belief that there is a real risk for Europe that deflation might take hold.

All in all, I think the last events point to a normalization in Europe which will favor the recovery of European banks, but will, in no way, contribute to a sudden take-off in the economy. The policies followed in the last years have most likely condemned Europe to a lost decade in terms of growth.