Barclays: Invest In EU-Leveraged Cyclicals

European economic data has been surprisingly good recently, but most investors are still fairly bullish. If anything the strong performance has made people more bullish because they think any value that may have been in the market has already gone. Dennis Jose and Joao Toniato at Barclay’s Equity Research group argue that Europe is seeing a cyclical recovery that will beat most pessimistic expectations.

“We reiterate our long-standing bullish stance on European equity markets, where profitability is bottoming, valuations look cheap and positioning seems sparse,” they write, explaining that they are really only recommending EU-leveraged cyclicals.

EU banks still overweight

Their key observation is that earnings momentum seems to be the driving factor behind European...