Recent analyses highlight a pronounced valuation gap between U.S. and European stocks, with European equities trading at over a 40% discount compared to their U.S. counterparts. This disparity is the largest observed in at least 35 years, with Europe's forward price-to-earnings (P/E) ratio estimated at approximately 13 times, significantly lower than the S&P 500's P/E ratio of 22 times. Deutsche Bank emphasized that this valuation gap has never been more extreme, while Citi noted that the positioning gap between U.S. and European stocks is narrowing. Analysts suggest that the current market volatility may favor defensive industries.