Earlier in the year, the valuation levels of EAFE equities looked quite compelling. That’s not the case so much anymore, after an impressive 8.7% gain in the past three months helped close that valuation gap. Most of these gains were driven by the European Central Bank’s stimulus program was launched in March, and recent economic data that shows growth is returning to many European economies. At the end of April, Morningstar reported that the MSCI EAFE Index had a price to earnings ratio of 18.1, which is slightly below the S&P 500, but above the S&P/TSX Composite Index. While there still may be some legs in this trade in the short term, we will need to see further evidence of a sustained turnaround. There are also worries that a disagreement between Greece and its lenders could result in the country defaulting on an upcoming payment. This uncertainty has been weighing on stocks of late, and could be a serious headwind in the future. For that reason, I am suggesting caution in the near term.