Europe Falling

Yes, pessimism over Europe’s prospects is high, and valuations in Europe are relatively low. But both for good reasons.

Below is another data point on how the markets are reflecting the divergence in economic performance and prospects between the US and Europe. Anticipated US inflation 5 years hence is around 2.4%, a little lower than at the start of the year when it was about 2.6%. But forward inflation in Europe is sinking fast, now at just 1.7%, down from 2.2% at the beginning of this year.