Cue the Griswold’s…Tis the season for European Vacation
As Christmas approaches, many of us happily turn our attention to our couch and TV, taking time to watch any number of Christmas classics, including “The Year Without A Santa Claus,” “It’s A Wonderful Life” and, of course, “Christmas Vacation.” While “Christmas Vacation” is always worthy of our time and a few laughs, for this late-December weekly wire we are actually more interested in another Griswold family farce, “European Vacation” – “Look kids! Big Ben, Parliament!” – as it appears Europe’s economy and markets are taking a turn for the better.
For years, Europe has more often than not proven to be a point of concern for investors. Consider, the European debt crisis of earlier this decade; political instability in Italy and the UK (e.g. Brexit) and disappointing economic performance, particularly of late as the US/China trade dust-up weighed on global growth, a pernicious development for Europe’s export-oriented economic model. While Europe continues to face structural headwinds – particularly on the demographic and fiscal fronts – there has been some encouraging news out of the Old World. The UK election has cleared away some of the uncertainty around the UK/EU relationship, and it looks like the former will be leaving the latter in 2020; Eurozone services activity has been accelerating; and German manufacturing activity, while weak, seems to be bottoming. Most importantly, the Phase 1 US/China trade deal should prove a positive catalyst for global investment and trade into the new year. Beyond improving economic fundamentals and a more constructive macro backdrop, we take comfort in the recent performance of European risk assets, as sovereign bonds move lower and yields higher, and pan European indices make multi-year – or even all-time – highs as investors price in a more encouraging outlook for the Continent.
Brinker Capital has been adding to our developed international – including European – and emerging international equity exposure. Valuation has been and remains quite attractive and many investors are under-allocated to both asset classes. With a bit of help from US/China relations, ex-US equities could rally nicely through 2020.
The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a registered investment advisor.