The markets sell-off since President Trump’s ‘Liberation Day’ tariff announcements took hold in an environment where, as Fathom has previously suggested,[1] US stocks were supported more by sentiment than by fundamentals. Shiller’s cyclically adjusted price-to-earnings (CAPE) ratio produces a valuation multiple by dividing the current price of the S&P by its inflation-adjusted average earnings over the past 10 years. It can provide clues as to whether the market is relatively over- or undervalued compared with historical earnings. The chart shows the CAPE ratio plotted against the five-year ahead returns of the S&P (annualised) from 1990 onwards. Both variables are on

A remarkable transformation has taken place in the global automotive export market in the past few years, with some of the biggest names in the industry left in the dust. China, a net importer of motor vehicles until 2018, whose automotive industry primarily existed to serve domestic markets, has accelerated its way into the forefront group of global exporters.  Refresh this chart in your browser | Edit the chart in Datastream China’s domestic production was already significant before that date — data from Wards Intelligence suggest that China has been the largest producer of vehicles since the Global Financial Crisis — but

Refresh this chart in your browser | Edit the chart in Datastream Europe’s sluggish economic performance relative to the US is sometimes blamed on its relatively expensive energy. That, in turn, is sometimes blamed on its efforts to decarbonise. But despite the growing share of renewables on Europe’s grid, it is gas prices that typically set the price of its electricity thanks to a marginal pricing system; and gas prices are about four times as high in Europe as they are in the US. There are several reasons for this. It is true that Europe has higher carbon taxes than the US,

As Spring 2025 unfolds, Europe finds itself at a potential turning point. Following prolonged stagnation and inflationary pressure, and amid a backdrop of escalating tariff tensions, a cautiously optimistic tone is beginning to emerge across macroeconomic indicators, financial markets and investor sentiment. This note brings together developments across key areas — economic data, inflation dynamics, market behaviour and geopolitical risk — to provide a coherent snapshot of Europe’s evolving outlook. Refresh this chart in your browser | Edit the chart in Datastream Euro area economies are gradually emerging from the stagnation that defined much of 2024. Recent improvements in industrial production and