August’s publication summarizes two articles that make the case for European stocks. The first argues that positive earnings surprises and continued multiple expansion will drive further outperformance. The second notes that a recent downturn in credit measures belies a better outlook for the second half of the year, and that some European bank shares could benefit from this upside surprise in credit creation.

• “Europe Equity Strategy: What Is Priced In? Gains Could Come From Both Earnings Surprises and Further P/E Rerating” Mislav Matejka, J.P. Morgan, August 12, 2013
• “Are We Nearly There Yet?” Bank of America Merrill Lynch, August 8, 2013