Valuation catch-up

European stocks trade at 12.7 forward earnings, which is below their long term average and still at a 31% discount to the US market trading at a forward P/E of 18.4, the top of its historical range. The current result season is also showing us that European corporate world is doing better than some top-down strategists have feared. We believe the current outperformance of European stocks still has legs to go, especially in the period of normalizing interest rates we experience today where valuations matter again.