Financial Industry Insights from Advisors Asset Management


Europe Kicking Off Needing a Second Half Comeback

The global macro backdrop continues to be dominated by the Covid-19 pandemic. The continent, like the U.S., is a patchwork of hot and cooler outbreaks with Italy, Spain, Britain and France acutely affected, while Germany, Eastern Europe and Scandinavia have a serious but generally more contained (but not controlled) Covid-19 situation. The economic challenge of re-opening all of the various countries is complicated, and fears of subsequent waves of the virus are hampering each country’s willingness to open up. As we race into the summer months, we should see a creep back to normal. Soccer is planned to commence in Germany as soon as this weekend, but that is subject to current news flow. In contrast, France announced sports leagues would not open until September, at the earliest. Britain is wrestling with school openings against the closing window of this school year. Regardless, much like the U.S., there will be no light-switch moment and even the most calculated strategies look haphazard in the shape shifting Covid-19 world. 

European markets are down over 20% year to date; that’s more than 10% lower than the U.S. and that accounts for a remarkable rally through April. U.S. dollar safe-haven status has also crimped returns for U.S. investors with almost all global currencies weakening against the U.S. dollar over the past two months – that simply continues a trend in place for several years. Part of the disparity in returns between the U.S. and Europe is the heavier weighting in banks, energy and industrials – three sectors that have been crushed by the pandemic. Technology, Non-cyclical consumer and healthcare are faring much better. Valuations and earnings will likely remain suppressed in the near term as the current crisis prevails, but the sheer force of liquidity injected into the system should provide a springboard to higher prices when economic activity resumes en masse. In the meantime, we are telling investors the same thing wherever they may be: focus on quality, follow revenues and be careful about debt. Valuations are always a consideration but be prepared to pay a premium for the attributes of success in the current environment.

We believe a bulldog mentality has never been so important in investing and that holds true regardless of which side of the pond you’re fishing. 

*Data as of 5/12/2020

CRN: 2020-0514-8303 R

The opinions and views of this commentary are that of C.J. Lawrence LLC and are not necessarily that of AAM.

This commentary is for informational purposes only. All investments are subject to risk and past performance is no guarantee of future results. Please see the Disclosures webpage for additional risk information at commentary-disclosures. For additional commentary or financial resources, please visit



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