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Feb 18
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AVOID
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Volodymyr Zelenskiy
President of Ukraine
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"We will not let other European nations go either." Zelenskiy explicitly warns that Putin's ambitions are not limited to Ukraine but extend to the broader European continent. This introduces significant geopolitical tail risk for European markets. If the conflict threatens to spill over or if Russia maintains a permanent aggressive posture against the EU, European assets warrant a higher risk premium compared to US counterparts. AVOID. The geopolitical overhang acts as a cap on valuation multiples for European indices. If the conflict remains strictly contained within Ukraine or ends sooner than expected, European equities could rally on relief. |
Bloomberg Markets
Zelenskiy Says He Cannot Imagine Putin Withou...
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Feb 18
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WATCH
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Joanna Rondeau
ECB Editor, Bloomberg
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Rumors are circulating that Lagarde may leave the ECB early, coinciding with French presidential elections where the "far right is riding high," creating anxiety about whether "we entrust the far right in France to have a say in picking the successor." Central Bank stability is a pillar of currency strength. If the ECB presidency becomes a political football in a volatile French election cycle, the uncertainty will likely force a risk premium onto the Euro and European assets. Investors typically sell the currency of regions undergoing leadership crises. WATCH. Monitor for confirmation of Lagarde's plans. If the rumor gains traction, it is a negative catalyst for the Euro and European equities due to governance uncertainty. The ECB has explicitly denied the report, and Lagarde has previously stated she is "not a quitter," meaning the status quo could easily remain. |
Bloomberg Markets
Lagarde to Step Down Early From ECB Position,...
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Feb 18
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LONG
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Louise Dudley
Portfolio Manager, Federated Hermes
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Dudley states Europe is "cheaper than US" and specifically that the "UK... is relatively more attractive than the rest of Europe." Valuation disparity offers a safety margin. Specifically, UK companies with global revenue exposure (not just domestic UK economy) offer growth at a discount compared to US peers. LONG UK EQUITIES and EUROPEAN EQUITIES as a value rotation play away from expensive US tech. Persistent economic stagnation in Germany or sticky inflation in the UK preventing rate cuts. |
Bloomberg Markets
US-Iran Talks 'Progress' & Lagarde Reported t...
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Feb 17
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LONG
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Ben Carlson
Director of Institutional Asset Management, Ritholtz Wealth Management
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"We are looking at the worst start to the year for US stocks versus MSCI World since 1995... European stocks, Pacific stocks... are just smoking the S&P." A combination of a potentially weakening dollar, "Sell America" sentiment due to political/AI risks, and attractive valuations abroad is driving capital overseas. The momentum is now self-reinforcing as these markets hit multi-year highs. LONG International Equities (Developed and Emerging) to chase the momentum and valuation gap. A sudden strengthening of the US Dollar or global geopolitical instability. |
The Compound News
“Unrealized” Capital Gains Tax is Economic Su...
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Feb 17
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LONG
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Dan
Morgan Stanley Analyst
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The speaker explicitly states, "Stick with the international trade... whereas the AI centric optimism has now ceded to concern, that's obviously benefiting international." He also cites "policy and fiscal tailwinds helping Japan, helping Latin America." As the "AI trade" in the US becomes crowded and faces skepticism (disruption fears), capital is rotating into undervalued markets. Europe and Japan offer a "valuation discount" combined with new fiscal catalysts that were previously absent, making them the primary beneficiaries of the US tech pause. LONG International markets as the momentum baton passes from US Tech to global value/cyclicals. Global recession or a resurgence of US exceptionalism driving the dollar higher. |
Bloomberg Markets
Tech Stocks Dip as AI Doubts Linger on Wall S...
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Feb 16
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LONG
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Marco Rubio
Secretary of State
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Rubio emphasizes that Hungary's success is "vital for our national interests" and notes the removal of energy impediments. Hungary serves as a critical manufacturing hub (the "industrial backyard") for major German companies (Mercedes, BMW, Audi). If Hungary secures cheap energy (via sanctions relief) and political stability (via US backing), input costs for German industrials decrease, and supply chain risks vanish. LONG German Equities as a second-order beneficiary of Hungarian stability. Broader German macroeconomic weakness unrelated to its Hungarian supply chain. |
Bloomberg Markets
Rubio Says US, Hungary Are Entering 'Golden E...
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Feb 16
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LONG
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John (iShares)
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"We are seeing people really allocating to credit as a way to perhaps diversify their portfolios from government bonds where I do see more risk from fiscal spend... Last year we saw more than 50% of flows into bond ETFs going into European fixed income strategies." Investors are fleeing U.S. Treasuries due to fiscal profligacy/volatility and moving into Investment Grade (IG) credit and European assets. The "structural favoritism towards Europe" suggests undervalued assets relative to the U.S. LONG High Quality Corporate Credit and European fixed income/equities. Contagion from U.S. volatility or a resurgence of inflation in the Eurozone. |
Bloomberg Markets
Memory Chip Shortage is Global Crisis in the ...
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Feb 16
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LONG
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Adam Lynn
Market Strategist / Guest Speaker
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"What's been its weakness for the past few years is now actually playing to its strengths... It's got financials which are performing pretty well. It's got industrials." The US market is heavily skewed toward expensive tech. As global growth expectations rise ("nice cyclical environment"), capital is rotating into undervalued cyclical sectors (Financials/Industrials) where Europe has a heavy weighting. This acts as a valuation floor and a diversification play against US concentration. LONG Europe as a cyclical/value alternative to US Tech. Contagion from a sharp US correction could drag down global betas despite better valuations. |
Bloomberg Markets
US Stocks to Lag European Peers on AI
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Feb 15
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LONG
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Marco Rubio
Secretary of State
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Rubio states, "In the end, it will come to a negotiated settlement," and notes that rebuilding Ukraine's infrastructure and energy grid will take "billions of dollars and years and years." The Secretary of State confirming a push for a negotiated settlement reduces the "tail risk" of endless escalation. A ceasefire triggers the "Reconstruction Trade." Heavy machinery (CAT) and agricultural equipment (DE) are essential for rebuilding infrastructure and restoring Ukraine's "breadbasket" status. Furthermore, a peace deal removes the primary geopolitical overhang on European markets, prompting a re-rating of EU assets. LONG exposure to global construction/agriculture machinery and broad European indices. Negotiations fail; Russia launches a new offensive that drags NATO in directly. |
Bloomberg Markets
Rubio Says US Wants Europe to Prosper, Allian...
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Feb 14
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LONG
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Michael
Guest / Geopolitical Analyst
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The speaker notes, "I don't think we'll ever be back to the place that we were where we completely subsidize European security... you've got to get to 5% [defense spending]." He also mentions Europeans are "stepping up with the defense industrial base." The US withdrawal of security subsidies forces European nations to drastically increase domestic military spending (from 2% to 5% targets). This capital flow directly benefits the European defense industrial base and general European equities exposed to rearmament. LONG European Defense and Industrials due to structural spending mandates. A change in US administration policy or European economic recession curbing budget capabilities. |
Bloomberg Markets
Is Trump Gearing Up to Strike Iran Again?
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Feb 13
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LONG
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Kathy Jones
Chief Strategist, Charles Schwab
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Kathy Jones notes a "diversification away from the US" and that investors are moving into markets that "have more potential to do better," specifically citing Emerging Markets. Alex Wolfe confirms a pickup in flows into Europe and Japan. The US Dollar is softening (or rangebound), and the Fed is easing (albeit slowly). A weaker dollar historically boosts Emerging Markets and non-US equities as capital rotates out of crowded US trades seeking better valuations. LONG non-US assets to capture the capital rotation. A resurgence in US inflation forcing the Fed to hike, strengthening the USD. |
Bloomberg Markets
US CPI Fuels Fed Wagers, US Inflation Comes I...
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Feb 13
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LONG
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John Studzinski
Vice Chair, PIMCO
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Studzinski notes that "The biggest pools of capital... are derisking from America" and moving into Europe for "resilience." He highlights that the European defense budget is moving toward "$1 Trillion." "Derisking" implies a rotation of capital out of US concentration and into European assets, specifically those linked to security and infrastructure. A doubling of the addressable market for European defense firms creates a massive secular tailwind. Long European Defense and Industrials benefiting from the $1T spending target. European bureaucratic inefficiency; slow implementation of banking unions. |
Bloomberg Markets
Poland’s Sikorski Says Europe Deserves Role i...
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Feb 13
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LONG
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Andrea Palasciano
Reporter
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"We are talking about billions. There is no understating how expensive a nuclear program is... just the upkeep of the French and the UK nuclear programs are extremely expensive." The geopolitical shift towards an independent European deterrent necessitates a massive increase in sovereign defense spending. Since the US is viewed as unreliable, this capital will flow specifically to European defense contractors (particularly in France and the UK) rather than US firms, driving a "Buy European" supercycle in the defense industrial base. Long European Defense beneficiaries via sector exposure. High costs could lead to budget stalemates or political fragmentation within the EU; non-proliferation treaties could block development. |
Bloomberg Markets
Europe Weighs How to Develop Its Own Nuclear ...
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Feb 13
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LONG
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Swati Gupta
South Asia Government Reporter, Bloomberg
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India is committing $40 billion to defense, explicitly buying "six US maritime surveillance aircraft" and "114 fighter jets from France." This spending marks a structural shift where India is "building some distance" from Russia (its traditional supplier) and redirecting capital to US and European defense contractors. This creates a direct revenue tailwind for Western defense firms (likely Boeing for US surveillance and Dassault for French jets) and the broader sector. Long US and European Defense sectors as they capture market share from Russian competitors in one of the world's largest arms markets. Geopolitical reversals or bureaucratic delays in finalizing procurement contracts. |
Bloomberg Markets
India Greenlights 40 Billion Upgrade to Its A...
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Feb 12
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LONG
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Sharon Bell
Goldman Sachs
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Bell notes US markets are expensive and concentrated. Europe offers exposure to "Old Economy" sectors (Industrials, Materials) and trades at lower valuations (UK at 13.5x PE). As investors seek diversification away from the US Dollar and US Tech concentration, flows will move to cheaper, cyclical markets like Europe and the UK. LONG Europe/UK as a valuation and currency diversification play. European economic growth remains stagnant compared to the US. |
Bloomberg Markets
Bloomberg Surveillance 2/12/2026
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Feb 11
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NEUTRAL
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The speaker notes that in Europe, "more analysts have downgraded rather than upgraded profit estimates" and the region depends heavily on just a few sectors like financials. Because the region is a "mixed bag" and lacks the broad growth drivers seen in the US or the political clarity seen in Japan, they maintain a neutral stance. NEUTRAL. Further deterioration in European industrial or financial data could turn this view negative. |
Bloomberg Markets
Software Selloff Is a Chance to Increase Expo...
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