Earnings
Trump’s tariff shock will push Europe into recession — but it’s also triggering a powerful integration response. In this report, we lay out the tactical case for staying defensive and the structural case for going long European assets when the dust settles.
European equities have surged on hopes of a low-inflation boom—but the rally has likely gone too far, too fast. With a pullback now likely, how should investors position themselves over the next 3–6 months?
The Q4 earnings results were spectacular but are now in the rear-view mirror. Now, investors are laser-focused on tariff threats, earnings headwinds brought about by a stronger dollar, and an unhappy consumer. Our analysis of earnings commentary found that, while companies often refer to tariffs during their earnings calls, most are perplexed and still in a “wait and see” mode. A strong dollar is negative for earnings, but the recent dollar retrenchment will bring relief. Wealthy consumers are still spending, but there are early signs of stress.
Eurozone banks have quietly outpaced the Magnificent 7—can they keep winning? With strong balance sheets, rising profitability, and structural tailwinds, European lenders still offer value despite short-term risks. Meanwhile, German equities continue to defy expectations, but is a near-term pullback on the horizon?
Jonathan provides an update on Canada following strong performance from Canadian stocks last year. On a tactical basis, underweight Canada versus global ex-US on the expectation of tariffs targeting Canada and Mexico. Following a sell off, or if a trade war is avoided, investors should place Canadian stocks on upgrade watch with the goal of moving to a modest overweight versus global ex-US.