Daily Brief - The Euro Zone's inflation conundrum

TLDR: Across the pond, the European economy dances a delicate ballet on the tightrope of inflation and economic stability. But wait, there's more to this high-wire act than meets the eye.

Euro zone consumers have tempered their inflation expectations, hinting at a collective sigh of relief for the ECB's anti-inflationary measures.

Yet, the data suggests inflation isn't bowing out quietly. It's expected to linger in the 2.5% to 3% range throughout the year, stubbornly above the ECB's 2% target.

Global growth, too, is hitting the brakes, decelerating to 2.4% in 2024. This slowdown, a product of tight monetary policies to quash inflation, restrictive credit conditions, and tepid trade, paints a mixed picture for the European markets.

Investors, draped in a cloak of cautious optimism, are placing their bets. The Stoxx 600 Index’s 12.6% surge at the end of 2023 was a testament to this sentiment.

Yet, the start of 2024 has seen more cautious beginnings. European shares fell on Tuesday as investors reined in expectations of early rate cuts following comments from ECB officials.

It's a similar tale in the US and investors think that once the world's biggest central bank moves, the ECB will likely want to move in sync.

Market Movers: When ECB rates get cut?

Here are the best and worst performing US stocks on a median basis post historical 25bps ECB rate cuts:

Top 3 Performing Stocks:

Ticker EXPE - Expedia, with a 6-month return of 102.49% Ticker CBRE - CBRE Group, with a 6-month return of 93.60% Ticker STX - Seagate, with a 6-month return of 74.61%

Bottom 3 Performing Stocks:

Ticker CNP - Centerpoint Energy, with a 6-month return of -5.36% Ticker TMUS - T-Mobile, with a 6-month return of -6.24% Ticker NDAQ - Nasdaq, with a 6-month return of -7.42%

Earnings Update: Brown & Brown reports on Monday

Brown & Brown's earnings outlook for 2024 is quite positive, backed by upward revisions in earnings estimates, historical performance in surpassing expectations, and strategic business initiatives aimed at growth and diversification.

Analysts expect the insurance brokerage firm to report earnings growth of 9.7% year-over-year, with an anticipated revenue increase of 8.1%. These figures represent a healthy growth trajectory for the company.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Asset Spotlight: Ralph Lauren 📉 Hermes 📈

Toggle analyzed 5 comparable instances in the past where Ralph Lauren's stock experienced a decline. Historically, these declines have often been followed by increases in Hermes' stock's price over the next 2 weeks.

Toggle highlights a similar relationship with Burberry - which could be oversold - and historically has also been followed by upside in Hermes stock.