Eurozone: CAPE Controlled For Sector Differences: Russia Below 5

Even financial analysts who are bullish on the US recovery will acknowledge that equity valuations are high and long maturity bonds don’t look terribly attractive, but that still raises the question of where investors should be looking for value. The Eurozone periphery, which has given the best developed market gains so far this year, and some currently out of favor emerging markets could be the key to finding good investment opportunities.

German valuations skew Eurozone average

Eurozone equities have lower valuations overall than US equities, but the periphery is even cheaper because Germany pushes up the average.

“Once adjusted for sector differences, German equities are significantly more expensive than most peripheral equities, and only fractionally cheaper than the...