(Bloomberg) -- US equities will soon regain their long-held edge over European peers as the brighter outlook for the old continent’s stocks is limited to sectors such as defense and banks, according to Jean Boivin, head of the BlackRock Investment Institute.

“This is a pretty narrow European story,” Boivin said in an interview. “There’s no strong conviction yet to play Europe over the US over a six-to-12 month horizon. We need to see more fiscal impetus beyond defense and implementation will be key.”

In a reversal of trends from past years, Europe’s benchmark Stoxx 600 Index is enjoying a record outperformance of the S&P 500 in dollar terms this quarter. The move is based on optimism around a ceasefire in Ukraine and Germany’s historic fiscal reform, which has sent defense stocks to all-time highs. The Stoxx 600 Banks Index has also surged 28% this year, driven by resilient earnings.

In the US, on the other hand, signs of a slowing economy and doubts about high big tech valuations have roiled markets. Volatility has picked up globally ahead of April 2, when US President Donald Trump has promised to enact levies on key trading partners.

Boivin said the US stock market “can live in a world with some tariffs.” He expects US earnings downgrades to be short-lived as tariff-related uncertainty dissipates.

“The US is the place where we expect to see the strongest earnings growth on a six-to-12 month horizon,” the strategist said. “We think a 10%-tariff world is a likely landing zone, and the US can adjust to that. But if it’s much more than that, then it’s a different story.”

Boivin’s views are at odds with other forecasters including at UBS Group AG and Citigroup Inc. UBS’s chief strategist Bhanu Baweja said this week he expects the S&P 500 to slide another 8% as a consumer slowdown crimps corporate earnings. And Citi’s Beata Manthey — who called the European rally as far back as October — expects further gains.

Boivin has a neutral recommendation on European equities and is overweight on the US on a tactical basis.

“The main thing now is uncertainty can lead to paralysis,” he said. “Once we have clarity on the exact tariffs, it might be bad for some sectors and good for others, but the markets will get on with it.”