Surprising market where the euro is the new reserve currency (temporarily ?).
Difficult to ignore that Europe is affected twice : - first by US tariffs, - then probably by more Chinese production redirected to Europe, while the RMB is also significantly decreasing, putting more deflationary pressure on Europe.
The main interest of Europe now is probably that it is totally free in term of monetary and fiscal policies which will give it more room to support the economy (unlike the US). It has also a large domestic market. Its weakness now is probably that Europe remains a net exporter and will be affected if global trade is decreasing. The strength of the euro is also not going to help exporters.
The main question for me is probably what China is going to do, not versus the US, but more versus the rest of the world. Do they redirect their production (from the US towards the rest of the world) ? or do they finally decide to really push their domestic consumption, which would be a real relief for the rest of the world. We know that they have the financial means to do it, but was lacking the political will so far.
My main concern in today's markets : both US and Chinese policies are really difficult to predict, which may limit investment for some time.
