The best trades in the world on the basis of technicals and fundamentals are in Europe and Emerging Markets and despite recent outperformance, you have NOT missed the trading opportunity in these markets.

After years of underperformance and thus, underwhelming fund flows European and EM equity asset allocation is picking up again and this plays right into our strength at

We are outlining our core investment thesis on EU and EM equities ahead of a deeper dive on the sectors we care most about.

Today we outline Europe, tomorrow we present EM.

A quick look to the recent charts tells you that owning non US equities despite the Trump euphoria and EU political theatre has paid off YTD, and even into late 2016.  See the charts on relative spread performance between the European Stoxx 50 Index (FEZ ETF) and the SPX (SPY ETF):

Let’s review our thesis on Europe.  The outperformance call is predicated on 3 main vectors:

1) Currency is a tailwind for foreseeable future:

A solid break of 1.08 in the Euro means we challenge 1.12 on the Euro next.

    • Currency is cheap and a boon for exporters and strength form here will help dollar based equity investors as shares translated back into Dollar from appreciating euro
    • Euro bottomed or began bottoming process in Q1 2015 when oil plunge forced the ECBs hand.
    • It’s a current account currency, unlike the USD and the ECB not far from where the Fed sits in an unwind of emergency policy. (that is NOT a consensus view)

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