Since its peak in May, the S&P 500 has run into a number of headwinds: Doubts about Abenomics in Japan, tapering in the US, a self-inflicted credit crunch in China, capital flight in the Emerging Markets, a government overthrow in Egypt, and so on. However, we haven’t seen any panicked sell-offs. The stock market is placing each issue in context. This is a good thing. Slowly but surely, different sectors and aspects of the economy are returning to more normalized pre-Lehman levels. The US is on an upswing. As the Emerging Markets have recovered and then cratered, the US market has recovered and then recovered more. The US stock market, the US economy, and the US Dollar are all at the top, relative to their peers in Europe, Japan and the Emerging Markets. However, September 18 is still on track to be the day the US Federal Reserve makes its ‘tapering’ announcement. Should we be afraid of tapering? Of course not. European stocks have not done as well as their US counterparts this year. For H1, the US was up +12.63%, compared to flat or negative performances for the UK, Germany and France. I strongly believe that this quarter could be different. European companies are taking advantage of low borrowing costs and given the “kitchen sink” work must be over by now, it is time for earnings in Europe to start bearing the fruit of the repair work of the last few quarters. I expect European company earnings to surprise to the upside and therefore I would be overweight Europe v/s US this earnings season.