The uncertainty concerning US policy, as well as the hegemony of China, at odds with Western thinking, means there is a new interest and pivot to Europe. We are seeing the pivot to Europe in the stock returns for the year. This move is at the beginning of a change, but worth following closely.
One of the best books on the topic is Rethinking Europe's Future by David Calleo. It is not a book of Europe's future but a history of its past, as it tells how Europe got to its current state of a partial European state. While many consider Europe a third alternative to the current bipolar hegemony, it is still far from a finished political product. Europe is a state of mind, an ideal, but still not a reality. There is monetary policy integration and movement to some form of political and economic union. However, the idea of nation-states still burns in the heart of most Europeans. Citizens still identify as their country of origin and not as "European". The transition will still take time, and as of yet, has not ensured success. Europe is a work in progress, which means that economies of scale, common regulation, universal financing, and speaking with one voice for international affairs are still in the distant future.
We can be excited by a Europe of strong investment opportunities, but the chance to outshine the US equity markets will still take time. Investing in Europe is a good tactical trade, yet it may not yet be a strategic re-weight.
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