‘In moments of high volatility it can be helpful to assess markets using a long-term perspective. In our latest note we look at the long-term case for European equities compared to US equities in absolute and relative terms.
The recent tariff announcements appear to reflect a longer-run trend, which is the accelerating reversal of globalisation. Economic nationalism is on the rise and international cooperation is declining. This is a significant threat to equity market valuations, since return on equity may be peaking at the same time that markets face a persistently elevated cost of capital.
But at the country level there may be varying degrees of vulnerability. US asset prices have been the major beneficiary of this globalised world, as US financial markets received capital account inflows in exchange for US current account deficit outflows. As these trends reverse, US assets may see the most selling pressure.’
Read the full update: https://lnkd.in/ecMF_Csu