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U.S. Insights – Jefferies Global Strategy: Battle of Europe vs U.S. Not Clear Cut as Expected

— Jefferies U.S. Equity Research & Global Strategy 

Jefferies U.S. and European Equity Research and Global Strategy teams published a collaborative report looking at investment opportunities across the firm’s coverage in the U.S. and Europe. Jefferies highlights that while the U.S. market is more expensive than Europe from a valuation standpoint, the margin is not wide relative to history, even prior to factoring in the potential impact of U.S. tax reform. When accounting for tax reform, Jefferies believes the U.S. is the clear winner among large caps and more or less equal among small-caps. Jefferies analysts compared several single stock names in both regions and were asked to express a preference when possible. In seven of the 13 “clear” preference cases, the analysts chose a U.S. stock over a European/UK stock. The “clear” preferences expressed in the report are as follows: Royal Dutch Shell over ExxonMobil, Gap over H&M, Comcast to BT Group, Kennametal to Sandvik, Estee Lauder to L’Oreal, Roche to Merck, Boeing to Airbus, Bank of America to Barclays, BMW to General Motors, Ashtead to United Rentals, Praxair and Linde to Air Liquide and Air Products, and Kingfisher to Lowes. FULL REPORT