The Glory of Low Expectations

Europe's equity markets are showing surprising resilience with a 47% earnings beat rate and strong revision breadth despite sluggish macro data. Trading at a modest 14.5x forward P/E, European stocks are positioned for a potential catch-up following significant underperformance relative to the US.

Key Takeaways

• 1.European companies are significantly outperforming expectations, with 47% beating and revisions breadth at its strongest in three years.
• 2.Equity markets are decoupling from weak macro data, specifically German industrial production, to focus on corporate execution.
• 3.Europe is currently undervalued and under-positioned, trading at a 14.5x forward P/E and seeing relative CTA positioning near prior lows.

Table of Contents

• Change of focus
• Beating
• Best week
• Room to catch up
• AI catch-up potential
• 14.5x

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