The gap between US stocks and European equities is no longer small. It’s wide, painful, and according to Jim Cramer, downright “hideous.” Speaking on CNBC’s Squawk on the Street on SUnday, Jim said, “The money keeps going to these European stocks. And it’s rather amazing.” The DAX in Germany is up 19% so far this year. The S&P 500? Down more than 1%. President Donald Trump kicked off the latest round of market instability on April 2, when he announced “reciprocal” tariffs that rattled investor confidence. That same week, the bond market got hit too. Yields spiked as inflation worries grew. Tech giants like Apple and Nvidia tanked, dragged down by their global supply chain exposure and China-related revenue streams. On April 9, Trump paused certain country-specific tariffs, but left China out. That made things worse for companies deeply tied to Chinese markets. Trump’s trade moves worsen investor fears Just when things were beginning to cool off, Trump piled on more pressure. On May 12, trade tensions between China and the US eased slightly, but it didn’t last. That Friday, Trump pushed for a 25% tariff on phones not made in the United States, calling out Apple, Samsung, and others directly. Hours later, he floated a 50% tariff on European Union imports, scheduled to start June 1. Markets had no time to digest the chaos. That same evening—May 16—Moody’s dropped its rating on US government debt by one notch, matching Fitch’s downgrade from August 2023 and Standard & Poor’s 2011 cut. The original S&P downgrade crushed stocks. The Fitch downgrade hurt, but less. This time, markets barely moved, but bond yields jumped. On Monday, the 10-year Treasury yield rose above 4.6% before pulling back slightly. Stocks stayed flat, but the bond market was shaken. Jim pointed out a key difference between now and previous crises. “What’s happening that didn’t happen then is there is an alternative,” he said . That alternative is Europe, which right now is attracting capital with cheaper stocks, more flexible rate policies, and stronger year-to-date returns. Wall Street reacts as Europe pulls ahead Even Barclays admitted that the “end of US exceptionalism” might be Europe’s moment. The European Central Bank has more space to cut rates. Their stocks are valued lower. Investors are taking note. In a May research note, KKR explained that institutional money is eyeing exits from the United States. “Many CIOs are considering moving assets out of the United States towards other parts of the world,” the firm said. But they also warned it’s not that easy. The US stock market is still twice the size of Europe, Japan, and India combined. KKR reminded clients that many American companies are large, liquid, and still generating strong returns on capital. Jim doesn’t believe in abandoning US stocks either. During last week’s Monthly Meeting, he listed six stocks he’s watching to buy if prices fall, and named five that worry him. At the top of his concern list? Apple. Even before Trump’s latest tariff threats, he was already nervous about the tech giant’s exposure. “There are tons of stocks I would like to buy if the prices come down,” he said. In his May 11 column, Jim talked about what he saw in Europe firsthand. “They are crushing it with stock performance that is outstanding, in many cases backed up by earnings,” he wrote. He said the US isn’t holding up. “America is hideously underperforming,” he wrote, comparing the US to its “European cousins.” He also described Europe as “safer and more predictable,” adding that markets there “can continue to climb given the momentum.” Jim says he doesn’t like the “sell America” approach. He said investors should be adjusting—not exiting. During his April 3 episode of Mad Money , right after Trump’s first tariff wave, he advised people to buy different stocks and cut exposure to riskier ones. He’s looking for domestic companies that won’t collapse during a slowdown. His ideal picks? Companies with pricing power, strong demand, low credit risk, and resilience even when the economy slips. While some investors are drawn to international markets, they may already have that exposure without realizing it. Many S&P 500 companies generate a large share of their revenue abroad, which means US stocks are more globally tied than most people think. Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top sites
