It’s Not the Economy, Stupid. For European Stocks, It’s Politics
- European markets saw a summer of trade, political and EM woes
- Valuations are down, outflows continue and cyclicals retreat
This article is for subscribers only.
European markets’ summer of discontent may be a taste of what’s to come.
It’s not that the fundamentals for the region’s equities are bad: economic data are finally perking up and earnings growth is steady. The issues clouding the outlook are political, ranging from the new populist government in Italy to the U.S.’s unpredictable trade policy. There are also risks brewing in emerging markets that are starting to haunt European markets.