Investors bet Trump will make Europe investable again
Subscribe to enjoy similar stories. DAVOS, Switzerland—Things are grim here in Europe. Are they grim enough? The continent’s elites gathered in Davos were united that everything is awful, after years of insisting that all was well.
The combination of President Trump’s tariff threats, the excitement in the U.S. about deregulation and years of stagnant growth have pushed Europe’s leaders to the realization that perhaps, just perhaps, tying up the region’s businesses in red tape is a bad idea. The trouble in Europe is to actually do anything about it.
Major changes notoriously only happen when Europe is hit by a crisis, so leading figures are trying to talk up the sense of crisis. European Central Bank President Christine Lagarde, speaking to the World Economic Forum in the Swiss ski resort, even described the situation as “existential." All this matters not just for Europe’s future, but for investors broadly. Many have grown uncomfortable about how well the U.S.
markets have done compared with the rest of the world. Some think that divergence is unsustainable and that investing abroad is a way to spread one’s bets. If Europe succeeds in changing course it ought to boost growth, and help European stocks, which, while they have surged so far this year, are up only about 50% over the past decade.
That is against a tripling of U.S. stocks. The problem lies with convincing Europeans that they are threatened enough to trade off their lifestyle for growth.
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