Subtitles section Play video Print subtitles Hello, welcome back to the Note, and Happy Thanksgiving to our American viewers. Now we've had a fairly quiet day on world market. Perhaps the most interesting development was another fall for the Euro against the Dollar. It's now almost back to its lows for the year set much earlier. And that's in line with another very dramatic long-term trend, which is the European stocks' utterly underperforming American stocks. If you take a look at this chart, you can see that since January 2008, the FTSEurofirst 300, when you judge this in common currency terms, has lost more than half of its value compared to the S&P 500. Those who remember back that far that top there was created by the rock tracing instant the Jerome Kerviel incident Société Générale Ever since then, European stocks have inextricably underperfomed US' stocks. Now a lot of this is the currency. So if we take the currency ex-fit equation and compare the Eurofirst in Euros with the S&P in Dollars, look at everything in local currency, you can see that the effect is more muted. There was a much more impressive rally for European stocks in the beginning of this year. But you can still see European stocks have given up some third of their value against the S&P, and the trend still looks very negative at present. How do we explain this? Some of this obviously is the Eurozone crisis. A lot of this is that the US has had a much more lenient monetary policy. Whatever you think of that, it certainly helps to boil the valuations of stocks. But I think the most important reason is to do with hope or optimism, a good theme of US Thanksgiving. American stocks have a very rich valuation of what appeared to be top of the cycle earnings; European stocks have rather low valuation of what appeared to be depressed earnings. That is the main driver. This we can expect that to reverse. And so, I think the American should be very thankful for the strength of this stock market at the moment. The chances are that at some point before too much longer, this long term underperformance by Europe of the US is going to start its reverse.