🔍 The focus this week: The eurozone’s long-lost mojo

European markets have been having a tough time keeping up with Wall Street. While the S&P 500 has already posted 25% gains this year, the Eurostoxx is barely in the green – and that’s the widest performance gap on record. In fact, European stocks are trading now at one of the biggest discounts ever, compared to US ones – even accounting for sector differences – and that’s a pretty clear sign of where investors’ heads are at.

And, look, there are some pretty big reasons why: the bloc’s biggest innovation is making more rules, not building the next Nvidia. It’s got a war on its doorstep, the US threatening tariffs, and a slowdown in China that’s hammering its exports. Oh, and Europe still hasn’t cracked its energy crisis. But let’s be real – the biggest problem for its stocks right now is that the region’s economy is running on fumes.

Unfortunately, a turnaround isn’t likely to be right around the corner. Forward-looking indicators like new orders are still dropping while closely tracked business surveys show activity shrinking in both the manufacturing and services sectors. That’s a shame because with Wall Street taking a moment to catch its breath after a tech-fueled bender, Europe might finally have a shot at closing at least some of the gap.

And with expectations as low as they are in Europe, even a small positive surprise could lift spirits. This week’s business and consumer confidence data probably won’t blow anyone away, but “less bad” might be enough to steady the ship. And if inflation plays ball and stays below the central bank’s target, that could pave the way for more aggressive interest rate cuts, which could give the economy a much-needed boost. That just might buy enough time for some longer-term positives to kick in. Of course, that’s a lot of “ifs”...

📅 On the calendar

• Monday: Germany business sentiment (November). Earnings: Zoom.
• Tuesday: US consumer confidence (November), US new home sales (October), Federal Reserve meeting minutes. Earnings: CrowdStrike, HP.
• Wednesday: Germany consumer confidence (December), US durable goods orders (October), US personal income and spending (October), US economic growth revision (third quarter), US core PCE (October).
• Thursday: Japan inflation (November), Eurozone consumer confidence (November), Germany inflation (November).
• Friday: China PMIs (November), Japan consumer confidence (November), Eurozone inflation (November).

👀 What you might’ve missed last week

Global

• Bitcoin’s brushed up against $100,000.

US

• Nvidia delivered big earnings, but without the fireworks investors hoped for.
• The US dollar stumbled, opening the door for a new gold bounce.

✍️ What does all this mean?

Nvidia’s earnings were hyped as the year's big showstopper – bigger than the Federal Reserve’s December meeting, some said. And while the AI darling did deliver, the fireworks weren’t quite as dazzling as investors had come to expect. Even with profits doubling from last year, the gains felt like a buzzkill to a market hooked on exponential growth. Two worries stood out for investors: Nvidia’s new Blackwell GPUs might not juice the bottom line as much as hoped, and the company might be leaning too heavily on a handful of big clients (read: cloud providers).

The riskiest of risky assets has been on a tear since the US election, now flitting around the $100,000 mark for the first time. And a few new things are driving the rally. First, there are whispers about a potential new US government role dedicated to digital assets. Second, the top US financial regulator – long viewed as the crypto world’s ultimate party pooper – announced he would step down in January. And third, BlackRock broke new ground in the market – selling options on its iShares Bitcoin Trust ETF.

The US dollar’s been on a tear since September, fueled by expectations of higher tariffs and market bets that a new government agenda could supercharge the US economy that would push inflation higher, and keep the Fed from cutting rates. But last week, the rally took a breather as folks started questioning whether the surge was overdone. That pause gave commodities some breathing room – especially gold, which has struggled under the weight of the strong dollar – which makes it more expensive for foreign buyers.