r/WallStreetbetsELITE • u/SuperGallic • 1d ago

Loss Risk mispricing between Europe and US Spoiler

Surprised by the relative magnitudes of the respective adjustments in both markets. The macro in Europe appears more favorable than in the US( less inflation, no impact of US tariffs on Euro CPI) and yet the drawdown in the US was much less than the European correction. Furthermore the US average P/E was already stretched when compared to the European one. Conclusion ( I think others will do the same analysis during the week-end): Beginning next week, I expect further correction to take place on the US equity markets while we should get some significant rebound on the European markets at some point during the week.😅🔥

0 Upvotes

40% Upvoted

2 comments sorted by

1

u/SamHenryCliff 1d ago

Depends on the EU response - any willingness for short term pain in their perspective is likely driven by calculated efforts to shore up in the longer term. As in, buying their dip might actually be a reasonable venture. By going through the pains of investing to replace US services, where possible, yeah it’ll take capital and investment (debt) up front but potentially (big if) more robust results down the line.

1

u/SuperGallic 18h ago

Thanks Sam. European response is going to take a while, as I understand what is communicated on that subject. Not sure we will get the dip next week. However, I see some stocks with 3 digits historical vol and 2 digits implied vol which may indicate that we are close to it. Plus the fact that we should get further portfolio reallocation between US and Europe.