Chart of the Day: "Historic Shift"

This from Bespoke makes sense, jibes with our thesis, and partially explains our core allocation’s year-to-date resilience:

Sentix. "Monthly data on investor sentiment collected by Sentix this month showed a historic shift in expectations between the US and Europe. First, as shown at left, expectations for the two regions have historically moved closely together. 

But this month saw a new local high for sentiment towards Europe even as sentiment toward the US plunged. The divergence is more clearly seen in a spread between the two, which hit its highest level since before the global financial crisis. What’s even more remarkable is the change in that spread. 

Historically, the spread has never moved more than 25 points in either direction during a given month. This month, the spread rose more than 40 points in a truly historic shift towards Europe driven by all manner of catalysts: recent outperformance of European stocks, the uptick in EURUSD, optimism over European fiscal policy, negativity towards US policy prospects relative to where they ended 2024, and relative valuations are some examples of what has driven the extreme shift."

Yes, per our chart below, this is a historic divergence in US vs Eurozone sentiment:



Although Germany’s fiscal plans are facing a hiccup:

Germany Fiscal Policy. This morning, the German Greens (a key minority party within the current Bundestag) said that they would not support the current defense and infrastructure proposal, which would likely mean it could not pass with its needed supermajority. The party was miffed at being left out of negotiations but signaled a willingness to negotiate specifics on the package which could shift some infrastructure imperatives but doesn’t necessarily mean it will not eventually find the votes to pass.