European equities are regaining investor interest as strong earnings, falling oil prices and diversification away from volatile AI stocks improve the region’s appeal.
Earnings are accelerating: European companies are tracking 22% YoY Q2 earnings growth, the strongest since 2022, with broad strength across sectors. Banks are leading: The Stoxx Banks index is up 21% this year, versus 11.5% for the Stoxx Europe 600, supported by higher rates and strong trading revenues. Flows are returning: European ETFs recorded positive net inflows in July, while BlackRock saw $4.4bn flow into its European equity products. Lower oil helps: Oil below $90 and easing Middle East tensions have reduced fears of a major energy shock for Europe. Diversification appeal: July’s semiconductor sell-off reinforced Europe’s role as an “anti-AI” trade with less dependence on mega-cap technology. Fundamentals improving: Eurozone GDP grew a stronger-than-expected 0.4% in Q2, supporting the rotation. Source: FT
Berkshire Hathaway's massive cash pile declined for the first time in 4 years, meaning it was finally a net buyer of stocks.
Source: Barchart @Barchart
Still hard to believe that just 6.5 years ago, the S&P 500 traded for less than 1/3rd its current price...
CAGR since 2020 lows: +20% $SPX $SPY Source: Trend Spider
From beta to alpha ?
57% of S&P 500 stocks are beating the $SPX this year, the most in a decade. Source. Barchart, Bloomberg Intelligence
The most profitable period in the modern history of the mining industry?
Source: Tavi Costa
Berkshire Hathaway hits highest price since Warren Buffett announced his retirement in May 2025
But there is still a huge gap that needs to be filled 👀 Source: Barchart
An important observation from Goldman which points out that half The S&P's "record" earnings growth is just "Big Tech" marking up its own stock portfolio.
Here it is, verbatim, from the desk of Goldman's Ioannis Blekos: "S&P 500 EPS growth is tracking at 26% year/year excluding the 'other income' from mega-cap tech's appreciating equity investments. Including those gains, the headline growth rate is 45%." i.e the "record" earnings season you have been told about - the one holding up the most expensive equity market in history - is running at 45% only if you count the gains that Nvidia, and its brethren, book when the stock portfolios they sit on go up. Strip out the mark-to-market of Big Tech valuing its own venture bets, and the number nearly halves, to 26%. Source: GS, zerohedge
The scariest number in the AI boom may be the one you won’t find on the balance sheet.
The five largest hyperscalers have committed more than $2.6 trillion to data centers, chips, and power infrastructure. Alphabet alone reportedly carries $811 billion in commitments, much of it disclosed deep in the footnotes. And these obligations don’t disappear if AI demand falls short of expectations. Meanwhile, the cost of insuring Big Tech debt is already rising. That matters because credit markets often detect stress before equity markets do. If AI infrastructure spending grows faster than the revenues it generates, the first warning sign may not come from tech stocks. It could come from the bond market of the biggest companies on Earth. Source: Kurt S. Altrichter, CRPS®
