Monthly TAA Report: Buy The Museum – Upgrade Euro Area Equities From Neutral To Overweight

Investors see Europe as a museum: A continent stuck in the past, with no ability to innovate, much less generate profits. But is this view accurate? In this report we argue that the structural headwinds to European profitability are a thing of the past. Political change and improving sentiment are also a tailwind for Europe. Meanwhile, in the US, economic uncertainty brought about by Trump’s policies have reversed the surge in animal spirits that followed the election. All of this is happening within the context of weakening growth. We upgrade European equities from neutral to overweight and downgrade US equities from neutral to underweight.