Benchmark construction idiosyncrasies, as well as the limited acceptance of diversification through style investing, has contributed to value’s persistent outperformance of growth in Europe.

Despite the convergence of gilt yields with the equity market yield and the implications this has for pension funds seeking to match assets and liabilities, investors should resist the temptation to shift wholesale into bonds.

European equity valuations still reflect inflated earnings growth expectations, suggesting that investors have yet to fully recognize the implications of macroeconomic estimates of sluggish growth and continued headwinds.

While inflationary pressures simmer in the United Kingdom, Continental Europe faces another year of economic stress.

What are the economic and investment implications of admitting ten emerging European countries to the European Union?

Fueled by the lethal cocktail of domestic constraints, regional impediments, and the global economic slowdown, Germany may be in for a prolonged period of economic malaise and deflationary pressures.

If history is any guide, and equity prices in the United Kingdom unwind in a pattern similar to the 1976 or 1987 bear markets, then most of the damage inflicted by the current downturn is almost over. If it plays out similarly to 1972–74, however, there still could be more pain to come.

Will Europe increase fiscal spending at the risk of undermining both the Stability and Growth Pact, as well as the EMU?

While linkers may be inexpensive relative to nominal gilts, they are no bargain.

The euro’s appreciation against the U.S. dollar holds symbolic importance for Europeans, but negative consequences for their economy. Until domestic demand in the region improves, the strengthening euro could undermine the Continent’s economic growth, corporate profits, and equity prices.