Europe

Europe’s near-term outlook remains clouded by uncertainty, even after the tariff reprieve. Our latest update breaks down why the risks to growth, profits, and financial conditions are still skewed to the downside — with Sweden standing out as a key bellwether.

Trump’s tariff shock will push Europe into recession — but it’s also triggering a powerful integration response. In this report, we lay out the tactical case for staying defensive and the structural case for going long European assets when the dust settles.

This report looks at the FX implications of the Trump tariffs, and the review of our Q1 trades.

Tariffs will make a difficult job almost impossible. Hitting and sustaining a precise 2 percent inflation target is more about luck than judgement. It requires both the starting point for inflation expectations and any inflation/deflation shock to combine perfectly to 2 percent. While structural inflation expectations in the euro area and Japan could be close to 2 percent, those in the US and the UK will be stuck uncomfortably above 2 percent. We discuss the investment implications for rates and FX. Plus: gold is vulnerable to a tactical reversal.

In this month’s Beta report, we continue our series supporting our bullish thesis on Europe. We take a deep dive into the aftermath of the European energy crisis – dispelling the myth that Europe faces risks of imminent deindustrialization – and evaluate the impact the approaching LNG wave will have on European industry and the global natural gas market.