Goldman Traders' Top Charts: AI CapEx 'Leaks' & What Has To Go Right To 'Buy Europe'

Europe is cheap... Europe has yield... Europe is "unloved"... Wall Street has been reciting that liturgy for a decade, and Goldman’s latest trader chart-pack is the latest verse (full note available here for pro subs). The punchline this time is less “buy Europe because it’s cheap” than “look how many things have to go right for that cheapness to matter.”

German 10-year Bunds and euro IG credit have converged on the STOXX 600 dividend yield. That is the market’s polite way of saying the equity risk premium in Europe is being squeezed from both ends: bonds finally pay something, and stocks are being asked to justify themselves as income vehicles rather than growth stories.