U.S. Corporate Margins are making all-time highs while Europe's are flat
The end of American Exceptionalism??? Source: Barchart, Blackrock
Many investors bet Germany’s “whatever it takes” fiscal stimulus package and an enormous uplift in European defence spending would drive a prolonged upturn in the region’s equity markets.
A BofA survey of fund managers showed allocations to Eurozone stocks leapt to their highest level since 2021 at the beginning of this year. But the outperformance was short lived. Strong earnings from the US mega caps have sent Wall Street stocks powering ahead again, despite Trump’s tariff onslaught and deteriorating US economic data. Weak second-quarter earnings in Europe have supported the growing view that the region’s stock rally is losing momentum. With more than half of the companies in the Stoxx Europe 600 having reported earnings, the index is on track for no earnings growth compared with a year ago, according to Bank of America, sapping optimism over a revival in the region’s equity markets. By contrast, the S&P 500 index’s constituents are on track to post 9 per cent year-on-year average earnings growth, according to BofA, powered largely by strong results from Silicon Valley’s tech giants and Wall Street banks. Source: Financial Times, LSEG
⚠️ Sales of Tesla’s electric vehicles plummeted 60 per cent in the UK last month amid a broader slump in European demand, with Chinese rival BYD surging.
➡️ There were 987 Tesla vehicles registered in July, compared with 2,462 in the same month last year, according to figures from the UK’s Society of Motor Manufacturers and Traders. Meanwhile, BYD registrations in the UK rose more than fourfold year on year to 3,184 in July, according to SMMT. ➡️ In July, Tesla registrations also fell 86 per cent to 163 vehicles in Sweden, 27 per cent to 1,307 cars in France and 58 per cent to 460 vehicles in Belgium, according to official industry data. ➡️The declines came despite the recent release of an upgraded version of its flagship Model Y sport utility vehicle. The slowdown comes amid consumer uncertainty over which models would be eligible for the government’s new EV subsidy scheme. Source: FT
An interesting view on europe by Gavekal
"The 15% tariff rate on US imports from the European Union will hit the old continent's exporting sector. But the broader economy can count on its domestic segment to mitigate the shock. Notably, the effect of the ECB’s interest rate cuts is becoming visible in a bank lending recovery across the eurozone". Source: Gavekal, Macrobond
The European Union will delay planned tariffs for six months to allow for trade talks
The European Union announced Monday that it is suspending for six months its planned countermeasures against the United States’ tariffs, which which were set to take effect this week. “On 27 July 2025, European Commission President Ursula von der Leyen and US President Donald J. Trump agreed a deal on tariffs and trade,” the EU Commission spokesperson for trade said in a statement. The spokesperson touted the agreement as restoring “stability and predictability for citizens and businesses on both sides of the Atlantic.” “The EU continues to work with the US to finalise a Joint Statement, as agreed on 27 July,” the spokesperson said. “With these objectives in mind, the Commission will take the necessary steps to suspend by 6 months the EU’s countermeasures against the US, which were due to enter into force on 7 August.” Source: CNBC
FY25 EPS revisions in Europe are trending somewhat worse than that of a typical year.
Source: Barclays, The Market Ear
Less than 50% of european equities sectors are reporting positive YoY EPS growth
Source: MacroMicro
Europe is heading for the next humiliation. If Nvidia continues its triumphal march, the chip manufacturer could soon be worth more than the 50 largest comps in the Eurozone.
$NVDA hits a new all-time high yesterday. Nvidia is now valued at $4.3 Trillion Source: HolgerZ, Bloomberg
