Nomura analyst Anthony Morris wrote in a note yesterday that “Europe will not be like Japan—it is already worse.”
At least since the 2008-2009 financial crisis, he argues, it is clear that Japan, the U.S., and the U.K. have begun to recover. Europe, however, appears to be on a different path:
Some people talk about the risk that Europe will be like Japan—entering a long period of bear markets, deflation and/or low growth. By some key indicators, Europe has already fallen behind Japan…
When equity market capitalizations fell around the world in late 2008, it was hard to blame anyone in particular. But something different has happened since then. The US, UK, and Japanese firms have more or less bounced back to 2007 valuations. European firms are still almost 40% below. One can debate how inflation is measured. But the verdict of investors is clear. Something is uniquely wrong with Europe.
Morris points to a handful of charts that show Europe is diverging from the rest of the pack:
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