European Equities And Angela Merkel’s Legacy ‘Hamiltonian’ Moment

European Equities And Angela Merkel’s Legacy ‘Hamiltonian’ Moment

EU flags waving in front of European Parliament building. Brussels, Belgium (Shutterstock)



European equities have underperformed U.S. stocks on a relative basis for over a decade, and especially since the Trump election win of 2016. This year, however, could be a turning point for both the euro and European stocks as European equities had their best quarter in five years. According to Bloomberg data, 5 out of the 7 best performing stocks globally are now in Europe. This is especially important as only 7 equity markets are positive for the year. 

Financial markets often run on narratives and this year of the 2020 U.S. election could be the one when European equities might end their relative underperformance as Europe might experience its own "Hamiltonian moment“.

The invitation letter for the European Council meeting simply stated: "A deal is essential. Now is the time.“ It took five days of intense negotiations and "falling forward“ for the EU to make real progress with a groundbreaking stimulus plan by European countries agreeing in solidarity to raise large sums by selling bonds collectively. 

European equites and the euro have been kept at bay by the consensus view that U.S. equities led by U.S. tech stocks were the