Experts were forecasting a recession and hard landings in the US in 2023 and 2024, and in spring this year, the IMF joined them, grimly warning of US recession risks. Instead, the economy kept flying with the Atlanta Fed suggesting GDP growth in the third quarter this year will hit an annualized rate of 3.9%!  Added to those poor forecasts, since early this year, "experts" have been warning that US markets are overpriced and Europe's provide better value.

There was a reason for that "overpricing" - Earnings Growth!   I invest in growth companies. Value is another word for poor performance.  For Q3 2025, the blended (year-over-year) earnings growth rate for the S&P 500 is 8.5%. If 8.5% is the actual growth rate for that quarter, it will mark the ninth consecutive quarter of earnings growth for the companies in the index. Europe's large company profits are up slightly but expected to fall by 0.3% year on year adding to several years of poor or no growth. 

I stayed with the US and will continue to do so for that and many other reasons including the following...
 

Picture: Depositphotos  
 

"London Bridge Is Falling Down" is a traditional English nursery rhyme. It tells children about the dilapidation of London Bridge and attempts, realistic or fanciful, to repair it. It may date back to bridge-related rhymes and games of the late Middle Ages but the earliest records of the rhyme in English are from the 17th century. 

 Political leaders over the last several decades would have learned that in primary school but forgot or - more likely - ignored the message when they became "leaders" because that is not all in ..
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Broken Britain 

Long before that nursery rhyme lesson, in round 400 AD Saint Augustine warned "To err is human; to persist in error is diabolical". UK politicians insist on persisting in error. Likewise, in proving Einstein correct; "Insanity is doing the same thing over and over again and expecting different results." I do not what word he would use for those doing the same thing over and over again and not expecting different results. Whatever - the result is an almost unfixable mess and attempts to repair it are "fanciful".  

Broken Britain was a description I learned recently from respected daily Financial Times columnist Lex. The FT is probably the most widely read financial and world happenings news source globally and is careful with its words!

These politicians own Houses of Parliament - one of the best known buildings in the world - is falling down due to years of neglect. Its sewage ejectors alone remain un-replaced since 1888. Restoring the whole could take up to 76 years, while the bill for repairs would stretch to £22bn ($29.5bn) that they cannot afford. And that cost estimate made in 2022 was made laughable by the cost this year for a new front door to the House of Lords that does not function properly, despite having undergone a major £9.6 million($12.9 million) upgrade!  76 years is political speak meaning "it will never get done" but that is a nothingness in time compared to the 700 years needed to replace the UK's entire water and sewerage system that was also built in the late 1800s and has long been in a mess. I think of myself as a long term investor but 700 years is slightly beyond my time scale! 

Other things are in a mess too -

- Birmingham, Britain's second largest city and the largest local authority in Europe, declared itself bankrupt in 2003 joining six other local authorities to do so since 2020. It was once a core part of Britain's industrial world leadership. 

- Britain’s sprawling gas network is still reliant on a fleet of antiquated aircraft engines, some stripped from 1960s RAF Lightning fighter jets. The estimated cost to replace those is nearly £300 million that will be paid mostly by low paid people making them even poorer.

- And there are many of those among the 4 million that have joined the population since 2010 causing a low pay, housing and healthcare "stress" crisis because no investment has been made to accommodate that growth; few new houses built, no new roads, sewerage systems, rail, prisons, schools, power systems, company investment etc. 

- Many roads are potholed causing car damage and increased, unaffordable insurance premiums

- The London Stock Exchange - once the world's most important until the NYSE took over in the early 1900s - is now 25th among world capital raising centres. 

- The IMF states that UK living standards will improve at the slowest rate in the G7. That will not be helped by inflation that increased to 4% in September way above France's 1.2%, Germany's 2.4% and Switzerland's 0.2%

- It had the lowest investment rate in the G7 for 24 out of the past 30 years and its labor productivity rate is 10-15% below France and Germany's and 30% below the US.

- Bloomberg recently reported that London's homebuilding starts are approaching one quarter of normal levels

- London 22.3% contribution to UK GDP is of critical importance. Remove it from the map and, according to a Financial Times report, average GDP per head is less than in Mississippi, America's poorest state. 

If there is a positive it might be found in the fact that UK household debt is the lowest in 23 years. But offsetting that is the low growth, low pay, high interest rates, high prices (food prices are up 27% YOY!) and high taxes. 

That begs an answer to the question - where to invest in the UK mess? I have one answer and invested in appropriately named Renew Holdings  - RNWH on the LSE https://www.renewholdings.com/about-us. It has a US listing under (RNWHF) but is very thinly traded there.  IF political "leaders" stop tinkering with taxes, slash the vast government and non government bureaucracies and start investing in the future then RNWH will do really well.  It is doing very ok as is and recently reported  "The Group expects to report trading for the year with record revenues and record operating profit and has a record order book as at 30 September 2025, which underpins the Board's confidence in the year ahead and beyond.

I bought in April this year and am up 17% since.  FT analysts have a 12 month low forecast of plus 30.7%, medium plus 36.2% and a high of 47.1% any of those will suit me!   I may buy more before Renew's preliminary results for the year ended 30 September 2025 are announced on Tuesday 25 November 2025.

I am not buying into...
 

Germany 

The German picture is not much better than Britain's but it has not destroyed many of its top companies...yet. The car sector is important and that is under threat from Chinese car makers due to optimisation of existing technologies and insufficient innovation by German makers. In 2017 they produced nearly 6mn vehicles and now produce 4mn.  Much innovation generally is killed off by a madhouse of German bureaucracies made worse by EU rules that  believe innovation stems from regulation!  Federal government infighting makes matters worse. 

The country is also as out of balance economically as Britain where London creates 22.3% of UK GDP. Germany's two southern states Bavaria and Baden-Württemburg constitute 19% and 16% respectively to Germany's GDP which in money terms means they together pay 74% of the country's internal financial transfers that finance the twelve of Germany’s sixteen states that cannot make their own ends meet. Plus some of those transfers go to the EU to finance its wasteful way of life.  To help pay the latter German public investment in decaying infrastructure is 2.7% of GDP compared to 3.4% of the US which itself needs much more. The economy is mired in its longest period of stagnation since the second world war that ended 80 years ago in 1945. 

Earlier this year the new government promised Euros €500 billion ($542 bn) to be invested in infrastructure and climate protection over the next twelve years.  Some of that is not new money but a movement from elsewhere in existing budgets plus it is woefully insufficient.  The German rail system is awful with many trains running very late and often not at all. Its Deutsche Bahn has calculated that it will need €290 billion to renew its infrastructure by 2034.  A calculation by the Federal Ministry of Transport estimates that €140 billion would be needed to only to maintain Germany's main roads alone. They have been overcrowded for decades and new ones badly needed. Many side roads are as potholed as Britain's.   A recent analysis by the consulting firm of the auditors PwC, has calculated that the money will not be enough: The requirement at federal, state and local levels would amount to €982.1 billion by 2035. Then comes the starting time - the construction industry is also urging a reduction in bureaucracy. "In highway construction, up to 85% of the time is spent on planning processes — only 15% on the construction itself".  I obtained all that info from dw.com

The electrical power supply system does not get a mention but that is in a mess and Germany will have to invest around 650 billion euros into the expansion of its electricity grids by 2045, according to a report by the Macroeconomic Policy Institute (IMK) of the Hans Böckler Foundation.  Added to those problems  all of Germany's nuclear power stations were closed to please the Greens without any planning for replacements that also need to go through the crazy bureaucratic and political system just to get started. So Germany reopened filthy coal fired power stations and - politicians being politicians - the Greens looked the other way because they had achieved their objective of getting rid of nuclear!  Another crazy added to that was timing; Germany closed its nuclear plants just as a new nuclear age was beginning elsewhere! 

Obviously there are good investments to be found among this overall bleak picture but I shall stay away.  I have considered Siemens Energy (SMEGF) or ENRX:N on the Frankfurt exchange. There will be huge world wide demand for its gas turbines alone but its PE of 93 scares me at present. 

The other most important country in Europe is ...
 

France 

It has many defects but is my second largest investment country choice after the US. 

Much of the world is entering a new nuclear age.  France never left the old. It kept its plants maintained and running. Nuclear energy today provides approximately 70% of France's electricity compared to around 19% in the US. The low cost of its nuclear power generation makes France a significant exporter of electricity in Europe including to next door Germany where the Greens stopped own nuclear power production!  France views nuclear power as a key component for achieving carbon neutrality by 2050, and the government has announced plans to build new reactors. Clean hydropower is its second largest source of electricity. 

I wrote extensively about France in March this year in my article titled Invest in France - A New World Leader Of The Western World.  The story remains intact and I find it worth rereading because things like the large start-up campus and work in new nuclear will help ensure a leadership future. I was very wrong about President Macron who has caused political paralysis that has also stymied stock market gains. He is now known as the "president of the rich" due to his close connection with the country's many billionaires something his predecessors had too. Their wealth has soared from 6% of French GDP in 1996 to 42% in 2024 according to a recent article in the Financial Times by Simon Kuper, who lives in Paris, title Time to guillotine France's super rich tax breaks  

In 1789 the French people rose up, had a revolution, and used the guillotine to rid themselves of such leaders. The poor and middle classes today are struggling again and there is a widespread desire for another revolution without physically chopping off the heads of those who have pushed them down for many years now. 

Some of the rich are already moving out - French entrepreneurs and wealthy families nervous about political turmoil at home are investing record amounts in Luxembourg-based annuities and shifting other funds to havens such as my home country Switzerland. Maybe they are coming for the nice chocolates too. I  wrote more about that and the country in Switzerland - Land Of Milk And Money. 

The French non-rich are not helped by the EU's  ECB.  France's inflation rate in September was 1.2% yet the ECB's interest rate is a punishing 2.15%. 

A striking thing is happening as I write. Due to the politically caused financial mess, the S%P has just lowered France's credit rating one notch from AA- to A+. One would expect that to hit the stock market but the CAC40 has gone up 0.4% instead.   

I shall stick with my picks with my favourite being Schneider Electric - SU on the Paris exchange - or (SBGSF) on the NYSE. It is expanding in the US with a $600 million investment there and will do well from the vast investments being made in the US power supply system needed to cope with AI and data centre demand etc. I wrote more about it and investment happenings in the US in  Paris - Europe's New Capital And A City Of Light For Investors.

Any GDP growth in the UK, France and Germany is coming from government spending and not the real economy. Exclude the government spending increase and those countries are in recession.

That spending produces nothing useful that needs truck transport, so I shall conclude on Europe by allowing trucks on the road, or rather the absence of them driven off by dysfunctional governments, to paint a picture of one thousand words headed...
 

The EU is dead
 

Photo: My own.
 

I live near this autobahn (interstate/motorway) just outside Zürich, Switzerland. Although we are not in the EU our road and rail systems are essential for the EU and this is one of Europe’s main cross roads that runs, at this point, around 30 kms (19 miles) south of Germany's Baden-Württemberg border - one of the most important German states I mentioned above. It is the home state of Mercedes Benz and Porsche cars and many world leading machinery makers. The lanes flowing towards us head on to south east Germany and Bavaria - the other most important German state - home of BMW, Audi and Siemens. Austria and many countries are east from there; Poland, Czech Republic, Hungary etc. Those flowing away split beyond the green overhead direction signs with the right lanes heading to France then via France on to Spain in the south and north European countries such as the Netherlands, Britain and Denmark etc. The left lanes head off south to Italy. In normal times one and sometimes two of those lanes each way were slow moving conveyor belts of nose to tail trucks at the time of the day 4pm in March, 2019 that I took the photo. The registration plates on those trucks made a fascinating sight in those previous times; German, Spanish, Italian, French, Netherlands, Lithuania, Poland Hungary, Sweden, Turkey, Russia etc. Those in this photo are nearly all local Swiss registered trucks.

Today - over five years on - there are still no more trucks on the road! 

Investors should therefore follow the money trucks and invest in the...
 

USA 

Staying in the US when experts were saying leave paid off nicely. I am up 33% YTD, mainly due to 65% of my positions being US listed companies. And that gain is after the 12.7% drop of the dollar against the Swiss franc. The S&P500 is up 14.37% as of now. 

There are many other factors, including the vast amount of new investments by companies being made in the US.  That started in Biden's era and has gained momentum under Trump. New billion dollar investments are being announce almost weekly and I shall write a separate article on those soon. I will include my main picks then. Most are in the power supply chain where huge investments in AI and data centres etc., are massively increasing demand for electricity

I shall conclude today with a few other important points -

- I suspect the dollar has now bottomed out, which will be good for "outsiders" like me and could trigger a reset back into US stocks by those who bet on Europe.

- - Likewise many of those who got into gold to protect against the dollar decline might get out of gold and into risk. 

- US banks are set for a significant easing of capital rules, that new research reported by the FT, suggests could unlock $2.6tn in lending capacity

- Americans hold $7.5tn in money market mutual finds. That is more than $1.5tn above the long term trend. As interest rates fall that money will seek a new home, much of it in stocks. 

- FOMO. I started this article with "Experts were forecasting a recession and hard landings in the US in 2023 and 2024 and in spring this year the IMF joined them."  Now a lot of people who heeded that and missed out will want to add risk to their portfolios for fear of missing out.  

Whatever causes the next big downturn, I do not see it happening this year, but will be alert next year in case the old adage Sell in May looks to be good advice. 

Long term looks very good and Investors should follow the money and invest in the US.  

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