“For a region at war, near recession, rapidly aging, economically inefficient, energy dependent, and innovatively lagging, Europe has a spring in its step. Europe’s benchmark Stoxx 600 Index is on course to outperform the S&P 500 this quarter by one of the widest margins in decades. The markets are pricing in sunnier days ahead for Europe. So is the euro, which has rallied 4.2% against the U.S. dollar this year. Adding to the euro-optimism: Germany’s extraordinary spending plans and calls for the European Union to reform its fiscal rules and unleash more spending on defense and infrastructure. Add in the prospects of the war ending in Ukraine and Europe’s economic/earnings growth prospects are rapidly being upgraded. Meanwhile, across the Atlantic, the opposite is unfolding. According to the GDPNow tracker from the Atlanta Fed, Q1 2025 real GDP growth is running at a -2.4% annualized rate.”
Morten W. Langer
