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Stock Market Has BO 7/27/23

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About a sixth of the European STOXX 600 index has reported earnings and so far less than half of them have beaten expectations, fewer than in a typicall quarter. Not only that, shareholders are severely punishing any misses in a sign the market's tolerance for meagre results is running low.  The European index has risen 9% this year, but most of those gains came in the first quarter of 2023, when investors were optimistic about China's post-COVID reopening and relieved that Europe would likely avoid recession.  Since then, Chinese growth has lost momentum, which has raised concern how European companies exposed to the world's second-biggest economy would fare while already dealing with persistent global price pressures and rising borrowing costs.  As a result, the bar for beats is low, said Axelle Pinon, a member of the investment committee at asset manager Carmignac.  "Since the beginning of the year, (equity valuation) expansion has been more limited in Europe, compared to the U.S," Pinon said. "Consequently, fewer upward revisions in earnings projections are needed to support the ongoing market rally."  The STOXX 600 is currently trading at a PE ratio of 15.66, compared with a ratio of 24.9 for S&P 500, its largest discount in at least 24 years, according to Refinitiv Datastream.  anal cysts have cut earnings forecasts for MSCI Europe companies since June 23, the longest such stretch of downward revisions since the outbreak of the Ukraine war last February.  In the second quarter, STOXX 600 company earnings are forecast to drop 8.1% year-on-year, a small improvement from last week's forecast 9.2% drop, but still marking the worst quarter for corporate results since 2020, according to Refinitiv I/B/E/S data.


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Europe is more reliant from China, credit and rates bites more (lower share of market credit), Ukraine War, green clean policies, no bigtech companies etc and this all makes this problem -> US equities are way higher and habe higher PE ratio.

I swap half of my money to EUR instead of PLN after this monster PLN rally but i dont feel comfortable with it. I still probably will switch the other half to USD (even though I hear about US twin deficit problems).

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