According to BofA, we've just seen one of the largest month-over-month allocations to European equities on record.
Is this signaling a European comeback, or simply a rotation ? source : BofA
The 2nd largest rotation into european equities in the last 25 years is currently taking place.
Source: Bloomberg, Barchart
An update on Germany snap election:
the conservative support has slipped below 30% ahead of the February election. Friedrich Merz’s center-right CDU/CSU alliance leads with 29% in the latest Insa survey, down one point from last week. The AfD also dropped by one point to 21%, while support for Chancellor Olaf Scholz’s Social Democrats (SPD) and the Greens remains steady at 16% and 13%, respectively. 👉 As it stands, a so-called grand coalition between the CDU/CSU and SPD appears to be the most likely outcome Source: HolgerZ, Bloomberg
In Germany, labor productivity has stagnated—or even declined—since 2020.
Meanwhile, US companies have embraced AI's benefits and recently achieved significant productivity gains. Notably, productivity trends in Germany and the US have been diverging since 1999. This divergence may also be linked to the introduction of the euro. Since the euro became undervalued for Germany—at least from 2004 onward—German companies may have felt less pressure to improve productivity. Source: HolgerZ, Bloomberg
The German economy has shrunk for 2nd year in a row ahead of elections, driven by both cyclical & structural challenges
German GDP declined by 0.2% in 2024, following a 0.3% drop in 2023. This marks only 2nd time since 1950 that econ has contracted for 2 consecutive yrs. Germany's prospects for 2025 remain bleak. Bundesbank predicts growth of just 0.2% and warns that another contraction is even possible if US President-elect Trump follows through on his tariff threats. Source: HolgerZ, Bloomberg
Spain proposes 100% tax on property purchases for non-EU buyers.
Spain is planning to impose a 100 per cent tax on real estate purchases for buyers from non-EU countries such as the UK in a bid to improve housing affordability by deterring foreign purchases. Prime Minister Pedro Sánchez announced the plan for the punitive property tax, which would apply to non-EU citizens who are not residents of the bloc, as part of a raft of measures aimed at tackling a “grave” housing crisis. Spain is one of many European countries where public anger is mounting over the difficulty of finding affordable housing to buy or rent as property prices soar and new construction lags far behind demand. Source: FT
Europeans own much less stocks than those in the US
Source: GD, Mike Zaccardi, CFA, CMT, MBA
Gas storage levels in Germany continue declining.
They are now down to just 72.9% of full, significantly below the average for recent years. Gas prices rise accordingly by 4.3% this morning. Source: Bloomberg, HolgerZ
