Eq: Dev ex-US

(Berlin)

US investors are growing increasingly interested in European equities. The reasons are many. Europe has undertaken huge levels of stimulus and its economy seems to be recovering from the pandemic more quickly than the US’. Further, the Stoxx Europe 600 is still down 10% on the year versus a 6% rise in the US, which means continental stocks may have more room for gains. Another interesting aspect to note is that the continent’s mix of equities has changed markedly over the years and is no longer dominated by banks. This means higher trending earnings and less volatility.


FINSUM: So you have an economy that might get out of recession faster than the US and returns that are 16 points behind, all with very accommodating monetary and fiscal policies. Investing in Europe makes sense!

(Brussels)

Even though cases and deaths are still rising rapidly across the European continent, many governments within the EU are planning their re-opening from the Covid lockdown. Spain, Italy, Austria, and more are undertaking and/or announcing plans to reopen as soon as this coming Monday. The rollouts don’t look likely to be rapid anywhere, but their announcement may be received as an important turning point both socially and economically.


FINSUM: Markets are up big today and this is a significant part of it. Might the US start to re-open in a 2-3 weeks (?)—that is the question on investors’ minds.

(Frankfurt)

New data on the EU economy has just come in and it isn’t pretty. Overall, the bloc grew just 01% in the fourth quarter, while Italy and France actually contracted. According to Commerzbank, “The spectre of recession is back … Economic growth in the eurozone came to a virtual standstill at the end of the year . . . The ECB is likely to view this with concern”. Ironically though, this may be positive for market as the ECB is likely to take an even more dovish approach.


FINSUM: It feels like we just did a time warp back to around 2013, when central banks were ready to stick to ZIRP for years. We all know how stocks performed then!

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