From MAGA to MEGA

European equities have outperformed their U.S. counterparts since the start of the year, with the Stoxx 600 up 6.1% compared to a 3% gain for the S&P 500. The ongoing rotation away from last year’s winners, primarily U.S. Big Tech, is gaining momentum. However, a note of caution is warranted: while European equities appear cheap relative to the U.S., they are trading in line with their historical averages on an absolute basis. Moreover, Europe’s structural and political challenges remain unresolved.

The upcoming German elections and the French government's difficulties in passing its budget do little to inspire confidence in European governance, especially at a time when strong leadership is essential to counter MAGA-driven policies. Leading economic indicators reflect this cautious outlook, with the Eurozone composite PMI hovering around 50 and the manufacturing PMI firmly in recession territory. The path from MAGA to MEGA ( Make Europe Great Again ) remains a long and uncertain one.