No need to wait for the green light in France

In our equity allocation, we strengthened our US versus Eurozone trade by downgrading the US to medium underweight and upgrading the Eurozone to medium overweight.

With a rise of 5.1%, global equities had a strong first quarter. Europe outperformed the US and we think this trend has further to run. The coming earnings season should boost both regions, but US equity valuations do not properly discount US policy execution risk, while they offer little room for disappointment. We expect the valuation gap between the US and the Eurozone to narrow, while a positive outcome of the French elections may unleash pent-up demand from foreign investors for Eurozone stocks.