Category: Daily Instagraph

The spread between the US BBB-rated corporate bond yield and the 90-day US T-Bill yield is at a historical low seen only on 5 other occasions over the past century. We agree the fact the duration of the corporates is longer while the yield curve is inverted explains part of this phenomenon. However, we also … Continued

We are reading that we not the only ones to believe that European stocks are in for a period of outperformance against their US peers and to believe what we have seen over the last couple of months is only the beginning. In dollar terms, European equities have outpaced the US during three major periods … Continued

As European economies are slowing due to the energy crisis and the tighter monetary conditions, we start to see job cuts. Sometimes these decisions, for example at Philips, Credit Suisse or SAP, are partly driven by specific corporate decisions. What strikes us is that the overall employment market in Europe appears rather resilient, at least … Continued

European Value Fund is now back to positive performance territory over 1 year despite the dramatic unfolding of a major geopolitical event at our doorsteps. The energy crisis has been the main driver of the relative performance of European stocks against their US counterparts. As the market started to price in the falling gas prices … Continued

It increasingly looks like this has been one of the best starts of the year for European equities over the last decades. Short covering, early indications of peak inflation and falling gas/electricity prices due the mild winter can be read as the main reasons for the rebound of 17.5% of MSCI Europe since end of … Continued

European stocks remains at a substantial discount to the US in terms of forward Price/Earnings ratio. The discount goes through all sectors: it is the least pronounced in IT and the most pronounced in energy. To us, this hardly makes sense as these 2 sectors are by nature global where companies compete worldwide. While US … Continued

Make no mistake: the yearly sabre rattling in US Congress about the debt ceiling is not the biggest problem and will eventually be resolved. The real issue is the absolute level of US national debt: 31.4 trillion USD and growing! In the long run, this is not sustainable and a substantial burden to the coming … Continued

The outlook for European banks is improving due to a combination of higher interest rates ( hence higher net interest income for the banks ) and lower provisions. As the energy crisis is fading for the moment, fears of an imminent deep recession are also abating. Today’s graph illustrates the mechanics bringing the estimated return … Continued

We want to make the point again that the valuation opportunities in equities currently lie outside of the US. While we showed Price/Earnings and cyclically adjusted Price/Earnings in the past to demonstrate this, today we show Price/Book. On this measure, Rest-of-the-World equities ( including mainly Europe and Japan ) are at their biggest discount to … Continued