European equities have meaningfully underperformed their US counterparts for the last decade. While we sense peak pessimism in Europe, we believe headwinds are easing. First and foremost, the turn in China's economy should boost European exports while underlying domestic demand looks solid and will likely receive support from fiscal stimulus. Second, domestic political uncertainties are manageable, in our view.
With valuations attractive on a historical and relative basis, we think there is a low bar for positive surprises in the Eurozone. This issue of Macro Monthly gives our evaluation of the implications for asset class attractiveness in coming months.