Something for Your Espresso – Europe is BACK

Morning from Copenhagen.
European equities are on the move today across the board, with CAC and IBEX leading the way as European sentiment is slowly but surely improving.
Positioning in European equities has been through the floor in recent weeks, while positioning is increasingly bullish for US equities. However, the US exceptionalism story is starting to fade a bit after yesterday’s lukewarm ISM services print. If the US growth picture is beginning to weaken, where does this leave current expectations for earnings and equity performance in 2025?
Currently, European equities are pricing in an increase in earnings of 10–12% in 2025, while the same figure for US equities is closer to 20–25%. Even if Eurozone growth remains below US levels, does the current picture justify such a significant performance gap between the US and Europe?
We are starting to lean decently bullish on European risk assets, as both positioning and macro are tilting in favor of European outperformance.
Chart 1.a: DAX is “only” pricing in an increase of 10–12% in earnings
We are starting to see European equities rally across the board—also relative to US indices. Is Europe poised for a broad-based comeback in risk assets?
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