Is Europe About to See a Positive Growth and Valuation Reset?

Fed continues to fight the last war

Key Takeaways

• Earnings Forecasts Are Off the Charts: The consensus is now seeing S&P 500 earnings rising at a +25% pace for the coming year — the level of expected operating EPS has ballooned +20% in just the past six months, which is the biggest upward revision since coming out of COVID-19 in 2021. Outside of that, we last saw something this powerful back in the mid-2000’s during the China-led commodity super-cycle. The big step-up in forecasts for 2026Q2 is more typical of recessions or at the beginning of new economic cycles — not the fourth year of a bull market phase.