This Great Graphic shows two time series. The white line is the S&P 500 and the yellow line is the Dow Jones Stoxx 600 (tracks European stocks). Using Bloomberg analytics, we indexed the two time series from the start of 2014. In the 14 months covered here, the S&P has risen by a little more 15.0% and the Stoxx 600 has risen by 19%.  

Over this time period, the euro has fallen about 18.2%. This would nearly completely wipe out the Stoxx 600 gain unless the currency was hedged. 

As the chart shows, from late June through the end of last year, the S&P 500 outperformed the Stoxx 600. During this window the euro fell almost 11%. However, since the start of this year, the Stoxx 600 has easily outperformed. Since the start of the year, the S&P 500 has risen about 2.4%, while the Stoxx 600 has risen by 13.5%. The euro is off about 7.6% year-to-date.  

What is the explanation for shift?  When the euro began to slide, US stocks outperformed. Later as the euro slide continued, European stocks have outperformed. It is difficult to explain this by discussing the dollar's impact on US corporate earnings, though many try.  

Other variables that may have contributed include the anticipation of the ECB launching a more aggressive asset purchase plan and, related to this is the negative yields. A third of the eurozone members have negative 2-year yields. Three members have negative interest rates on 5-year benchmarks. Four eurozone countries have 10-year yields below 50 bp. Another consideration is that so far this year, European economic surprises are mostly to the upside, while the US data has mostly disappointed.  

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​Read more by Marc on his site Marc to Market.