Europe's P/Es

Europe has been getting better all year.  Here's an excerpt of what Dr. Ed Yardeni thinks:

"The rebound in forward P/Es has been widespread among the major stock markets of the euro zone. They are mostly back to 2009 levels prior to when Greece hit late that year and early in 2010. In other words, investors no longer seem to be worrying about a “Grexit” or any other threat to the integrity of Europe’s monetary union. The question is whether there is more upside for the region’s valuation multiples. 

I think there might be, but forward earnings, which has been flat-lining since 2011, as I noted yesterday, needs to show some signs of life. That, in turn, requires that European economic indicators show that the region’s economy hasn’t just bottomed, but is actually recovering. The latest batch of these indicators does show a recovery, but a slow-paced one that may already have been discounted by the rebound in valuation multiples."

Signs of economic improvement have been manifest for months.  The latest indicator that things may be getting better over there comes the news that Ireland predicts a December exit from its international bailout program.  Europe's not out of the woods yet but all indicators seem to be indicating that the worst may have passed.  European ETFs have under performed the US over the past several years and perhaps it's time to ponder whether that same scenario will continue going forward.  Not saying that's going to happen of course, but we may need to consider whether there will be better growth in Europe and abroad next year than in the US.

Link:  Yardeni: More Upside for Euro Zone's P/Es?

*Long European related ETFs in client and personal accounts.