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Underperforming Europe

Oct 14, 2024

Profit levels and margins for European companies have barely returned to their pre-2007 levels, while U.S. companies have seen their profits surge by 150%, accompanied by a significant expansion in margins. The valuation premium and multiple expansion of U.S. equities is well-justified by the fact that American companies have outperformed their European counterparts since the global financial crisis. While the dominance of Big Tech plays a crucial role, there are also deeper structural reasons behind Europe’s corporate underperformance to this extent.

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