Senior European Equity Strategist on 2026 outlook, value, and currencies (with Anna Edwards, Guy Johnson)

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Goldman Sachs 9.0
Investment Bank $2500.00B
Sharon Bell 8.5

Senior European Equity Strategist on 2026 outlook, value, and currencies (with Anna Edwards, Guy Johnson)

dxy

The dollar can depreciate in 2026 against most countries, currencies globally. Cites Fed rate cuts, overvaluation, and portfolio diversification away from concentrated US big-cap exposure.

11/12/2025 4:28:43 PM	medium term cautious down	20 days later	-0.33%	+0.17%
10/15/2025 9:58:39 AM	long term cautious down	60 days later	-0.24%	+0.12%
9/29/2025 2:12:26 PM	short term cautious down	6 days later	+0.35%	-0.17%

Asks for the 2026 outlook given Mag 7 and European stock performance.

Anna Edwards
Sharon Bell

Europe has done well, especially indices heavy in financials. Defense stocks look expensive but have growth; there could be valuation volatility.

Defense stocks are up 4x since Ukraine invasion, performed well until summer, and have come off a bit. Demand is there as Europe commits to upping defense spending.
Asks if currency calls have been the key driver and if dollar weakness will continue.

Guy Johnson
Sharon Bell

The dollar can depreciate in 2026 against most currencies, more against Asian than European. The dollar looks overvalued.

We have the Fed cutting rates, and people are questioning concentrated exposure to highly valued US big-cap stocks, leading to portfolio diversification and downward pressure on the dollar.
Asks about the value trade and why now.

Guy Johnson
Sharon Bell

Clients want to diversify from Mag 7 due to size, performance, and high valuations. Europe still has good value versus the US, like banks, but the valuation gap has narrowed.

Pushback is that there aren't many super-value places because Europe hasn't had earnings growth. Quality stocks have underperformed and depend on China doing better and the dollar not falling too much.
Asks about realistic returns for Europe next year.

Anna Edwards
Sharon Bell

Expect 5-6% price returns plus 3-4% dividend in euros. For a dollar investor, total return could edge into double digits. Performance will be driven by 5-6% earnings growth.

This is better than the 0% earnings growth this year.

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