Wednesday, September 13, 2017

Why Europe remains prominent in our portfolios. With a word of caution going forward...

Bespoke Investment Group's morning message spoke to why we remain bullish on European equities.
Employment in Eurozone has grown as fast or faster than the US for each of the prior 3 quarters ending in Q2 2017, providing more evidence that the European economy is at an earlier point of its business cycle than that of the US. 
That said, we're not in the crowded camp that believes the U.S. dollar will continue its rapid descent from here (the dollar's weakness this year has been quite the tailwind for European stocks [in U.S. dollar terms]). If we're right, the stable to rising dollar will become a headwind for European equities translated in U.S. dollar terms. However, a stronger dollar (weaker Euro) will provide a boost to European exporters, potentially offsetting the currency hit.

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