Female dogs, the S&P500, and the Eurostoxx50

I remember when the Eurostoxx50 index first broke 5,000.  It was the beginning of the new millennium, telecom stocks were flying high, the internet was giving rise to us not just buying books on Amazon, but DVDs, and the most popular song on the radio had us wondering who let the dogs out. In short, it was a great time to be alive in Europe and the S&P500 index was trading at 1,500.

Then everything changed. While European markets plodded along far below their previous highs, obsessed over deficits, austerity, and orderly monetary union, the U.S. churned out trillion-dollar tech giants on waves of speculation, deregulation, cheap money from the Federal Reserve, and the S&P500 breached 6000. It was a great time to be alive in the US, and the gap between the two indices stood at 1000 in January 2025.

Then President Trump imposed a 10% tariff on goods from the Heard and McDonald Islands, which are remote Australian territories inhabited only by penguins and seals. As a result, US stocks succumbed to their weight of high valuations, tech stocks crashed, and it was time to buy Europe, according to the Financial Times. Everyone piled in, and the difference between the indices narrowed to a mere 150 points.

Whilst it may very well be true that we should buy cheaper European stocks, timing is what they call a female dog, and the gap between the two indices has now widened to 850 points again. Where do we go from here? To borrow the words of Jules from the immortal Pulp Fiction (1994): I dare you, I double dare you, to buy Deutsche Telekom and Ahold, instead of Nvidia and Apple.