It’s not bearish for the stock market and stock market investors if European banks are making new highs.
And that’s exactly what’s been happening.
Go back and study history. You’ll see that when there are cracks in the market, and things are falling apart around the world, European banks are right there at the front of the line leading stocks lower.
You simply do not see European banks as leadership groups when stocks as an asset class are under pressure
Up 47% This Year
The S&P 500 is up 8% so far this year, which far exceeds the average annual return for the index.
Great.
The European Financials Index Fund is up 47% this year.
Yes, 47%. This year alone.
Here are the new all-time highs for the iShares MSCI Europe Financials ETF (EUFN):
These stocks are leaders.
When these types of names are leaders, what kind of market environment do you think we’re in?
These economists keep trying to scare you into believing the world is about to fall apart.
But the stock market continues to indicate the exact opposite.
Angry Economists Are Back
Economists trying to scare you is a classic characteristic of strong uptrends.
In my experience, when all the economists start to tell you how great everything is, that’s when you want to be selling.
Here’s the latest from Moody’s chief economist warning the U.S. is on the “precipice of recession”:
We’re glad to see it.
This is like a ritual that we do. Stocks go up, economists get sad, stocks go up some more.
That’s how bull markets work.
Meanwhile, the European Financials ETF keeps closing at new all-time highs, just did so once again yesterday.
And companies like Banco Santander (SAN) and Banco Bilbao Vizcaya (BBVA) are ripping this year, up 76% and 69%, respectively.
Just for a little icing on the cake: Deutsche Bank (DB) is up more than 100% in 2025.
Yes, that Deutsche Bank.
If things were so bad out there, and these economists were actually going to be right for once, would Deutsche Bank double in value during the first half of the year?
No.
Everybody’s wrong.
Watch these European bank stocks. These names are your tell.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs