Euro Area

As Trump’s victory odds rise, the underperformance of European equities deepens. How negative would a global trade war be for European assets?

We review some of the key data releases this week that we find have an impact on our currency strategy. Long yen positions make sense today. Long sterling and the euro bets are more of a judgment call, and we will fade any strength in these currencies. This report delves into these nuances, and suggests a few trade ideas.

Investors should overweight US assets and de-risk their portfolios in anticipation of a major increase in policy uncertainty and geopolitical risk surrounding the US election and its global ramifications.

The real threat to European equities is growth, not political risk. How low will Eurozone earnings fall during the coming recession and how much will equities decline in response?

At first glance, France has moved to the far left. However, this coalition is fragile, and Macron’s allies still hold the balance of power. What are the assets that will benefit from this new political setup, and those that will not?

Does the incipient slowdown in European data herald a soft landing and a goldilocks period for equities? We have our doubts.