The Stoxx Europe 600 index has underperformed the S&P 500 by 21% this year, the most on record.
This comes as European stocks have returned only 3% year-to-date much below the 24% gain of US stocks. The Stoxx Europe 600 index is now on track for its 8th year of underperformance out of the last 10. Over the last decade, European equities have increased by just 50% much less than the S&P 500 return of 187%. As a consequence, the US stock market is now 4 TIMES larger than Europe. Investors are choosing the US over Europe. Source: FT, The Kobeissi Letter
Eurozone wages jumped 5.4% YoY, the biggest increase since the euro was introduced.
The data may complicate the ECB’s easing plans. Source: HolgerZ, Bloomberg
Spoiler: France will continue to miss deficit targets.
It already has the highest tax burden in Europe, and there are no real structural reforms on the horizon. Source: Michel A.Arouet
🚨 The “Euro swap cash basis” is negative for the first time since its creation in 1999.🚨
👉 It reflects the difference in cost between borrowing money in euros and the cost of swapping it to another currency, like U.S. dollars. 👉When it’s negative, it means borrowing in euros and swapping it to dollars is unusually expensive or difficult. 👉The fact that it’s negative for the first time since 1999 suggests that dollar demand is at an all time high🥤 Source: BowTiedMara @BowTiedMara
The US election doesn't change geopolitical truths facing the EU:
(i) China and Russia are allies - China is Putin's biggest enabler; (ii) the EU depends on the US for military protection, the US does NOT in any way depend on the EU. Strategic autonomy is a dangerous illusion... Source: Robin Brooks
Political risk is in Europe, not in the US
The three-year-old union between Scholz’s Social Democratic Party (SPD), the Greens and Lindner’s Free Democratic Party (FDP) had been on shaky ground for some time. Chancellor Olaf Scholz said he would call for a confidence vote on Jan. 15, raising the possibility of elections earlier than scheduled in March. Source: FT, CNBC
A double-whammy for Europe: tariffs on US exports + increased defence spending...
Source: The Economist
This is how Europe continues to do business with Russia - exporting through Kyrgystan (among others)
Source: Robin Brooks on X
