One of Us Is Wrong
Defensive underweight contradicts top-down view
Our models show a clear contradiction between the neutral recommendation for European equities vs fixed income and the all-time record underweight in defensives, which we discussed two weeks ago. There is normally a good correlation between a bearish view on equities and defensives, but over the last year this has turned negative in Europe. The US and Japan do not share this problem. It’s one that Europe needs to resolve.