European Equities Cheap Relative To US, Long-Term CAPE

Most analysts are bullish on equities for 2014, but there is still the question of which markets are best positioned to benefit from the recovering economy. US equities have probably had as much re-rating driven growth as they can stand this year, and European stocks may be relatively cheap even if they no longer have the low multiples that have characterized them for the last few years.

“Not so long ago, there was a strong and consistent value case that could be made for equities. UK and European equities looked cheap in absolute terms on most/all measures and super-cheap in relative terms on most/all measures,” writes Jonathan Stubbs, but he says that European equities still come up as “not cheap,...