So one of the things we (and others) noted going into the first round of the French elections was that investors and traders were hardly bearish on anything European.
“Overweight” European equities was on everyone’s reco list, € credit was (still) asleep at the wheel despite sovereign spreads’ best efforts to convey redenomination risk, and as for the perceptible hedging in the euro, well it was just that – hedging. Which meant a whole lot of people were long (see here for more than you ever wanted to know about that).
Well, now that the market got what it wanted (the heavily-favored Macron in the runoff), it’s worth asking if the bull thesis for eurozone stocks has become even more compelling.
That’s what SocGen’s Andrew Lapthorne set out to explore on Wednesday by way of a comparison with US equities. What he found was more interesting for what it said about the US than for what it said about Europe. Specifically: US equities are really, really expensive.
Excerpts from his latest note are below.
Via SocGen
