Euro

A global portfolio is likely to return only 5.3% a year over the next decade, compared to 6.7% in the past. Investors either need to lower their return expectations, or take more risk. Our total return methodology remains consistent with previous editions, with changes limited to the Alternatives section.

August offers an opportunity to review our key views. European growth is turning the corner and inflation is improving, but does it guarantee an imminent breakout in European stocks?

The DXY will continue to have near-term upside, as economic growth holds up in the US, while it deteriorates in other parts of the world. Remain constructive on the DXY at current levels, but pivot to a short position on evidence US growth is boosting the rest of the world.

In recent months, the European and US economies have greatly diverged, with the Euro Area massively disappointing while the US has surprised to the upside. Can this dichotomy continue or is it Europe’s turn to shine?