We remain Overweight Europe vs the US

Huge medium term expectations are priced in to US Equities with I/B/E/S expectations approaching a record 25. This has led to an unprecedented divergence between US & eurozone long-term earnings-growth expectations. Our indicators and analysis suggests that US sentiment may be over optimistic and point to a robust recovery in eurozone earnings over the next 12 months. Banks are the key factor here: for eurozone to outperform US equities, we still need eurozone Banks to beat their US peers. David believes the catalysts are there for this to happen and we remain overweight the EZ vs US.