U.S. economy and stocks face a difficult year — and could even lag Europe

Last twelvemonth took U.S. economical maturation connected a bumpy thrust — and the twelvemonth up besides looks tough. It's led immoderate strategists to reason 2023 could beryllium Europe's clip to shine.

Zeynep Ozturk-Unlu, Deutsche Bank's main concern serviceman for EMEA, sees a lawsuit for Europe outperforming some economically and successful superior markets, with contraction and recession fears becoming "more accelerated" successful the U.S. than successful Europe.

This is contempt Europe facing its ain challenges, Ozturk-Unlu said, including the ongoing warfare successful Ukraine, the vigor situation and ostentation that has not yet peaked — and is improbable to deed the European Central Bank's 2% people until mid-2024 astatine the earliest.

"Europe has been successful expansionary fiscal argumentation mode for rather a while, particularly owed to the vigor crisis," she told CNBC's "Squawk Box Europe" Monday. "But beyond that, not lone the internalization of U.S. manufacturing and depletion wrong the U.S., Europe is besides betting connected the reopening of China and it is going to springiness affirmative tailwinds to the European maturation story."

European GDP maturation past outpaced the U.S. successful 2017, though last 2022 figures person not yet been released.

Ozturk-Unlu pointed to the diversification of sectors successful Europe compared to the U.S. and sustainable accumulation growth, peculiarly successful Germany and France, arsenic a lawsuit for Europe having much unchangeable economical growth.

When it comes to stocks, she continued: "It doesn't mean Europe is wholly immune and is successful large shape, but successful comparative presumption the displacement from maturation [stocks] to worth really gives a small spot much accidental to Europe compared to U.S."

In the twelvemonth to date, Europe's Stoxx 600 scale has risen implicit 5% versus a 3.4% summation successful the U.S. S&P 500.

Despite clocking their worst show since 2018, European shares besides outperformed the U.S. past year, ending with a 13% nonaccomplishment compared to 19.4% for the S&P.

"There's this accidental coming from the important undervaluation of Europe compared to the U.S." Ozturk-Unlu added.

"That's wherefore we deliberation that the satellite extracurricular of the U.S. volition outperform the U.S., and Europe successful comparative terms, successful equities, volition outperform."

Deutsche Bank is not unsocial successful its much optimistic outlook for Europe.

Further tightening by the Federal Reserve, China's reopening providing a boost to European economies, euro portion fiscal stimulus, and vigor prices coming down were each cited by different strategists CNBC spoke to arsenic reasons Europe's system could outperform.

Karsten Junius, main economist astatine Swiss slope J. Safra Sarasin, level GDP maturation successful the euro portion this year, versus a 0.5% contraction successful the U.S.

However, helium does not expect this to construe into outperformance successful equity markets, helium told CNBC by email. He said this was due to the fact that of factors including the caller appreciation of the euro, which tends to measurement connected net with a three-month delay; and greater monetary argumentation headwinds successful the euro area, with the European Central Bank down the Fed successful its tightening cycle.

A fig of strategists person argued that portion markets were driven by monetary argumentation successful 2022, they volition beryllium much guided by economical information and net this year.

They see Joost van Leenders, elder concern strategist astatine Van Lanschot Kempen.

Unlike Junius, helium was much cautious that Europe's system volition outperform the U.S. connected a year-average basis; but said stocks could astonishment to the upside.

"If determination is simply a recession successful Europe and the U.S., determination needs to beryllium downgrades successful presumption of weaker net crossed the committee — the U.S. looks much progressed successful that sense," helium told CNBC via phone.

"But if the recession successful Europe turns retired to beryllium precise shallow, past due to the fact that the discount of Europe to U.S. is astir arsenic wide arsenic it has ever been, it could beryllium a trigger to unlock that valuation discount," helium said, arsenic agelong arsenic the Fed doesn't commencement cutting rates and boost U.S. maturation stocks.

Recent information has shown U.S. December PMI figures for services fell to a four-month low and manufacturing fell to a 15-month low arsenic optimism was astatine its gloomiest for 2 years; portion equivalent figures successful the euro portion remained successful contraction but improved month-on-month and amazed to the upside.

Paul O'Connor, caput of the multi-asset squad astatine plus absorption steadfast Janus Henderson Investors, agreed that determination were "good reasons" to judge an epoch of U.S. banal marketplace outperformance had begun a reversal that could widen done 2023 and beyond.

"While post-Global Financial Crisis U.S. equity outperformance was underpinned by superior U.S. net momentum, this power was amplified by a comparative valuation displacement successful favour of U.S. stocks. Both trends are present reversing. While U.S. stocks look costly comparative to bonds and their ain history, stocks successful astir different markets look reasonably valued," helium told CNBC.