There’s No Place Like Home
Given the successful release of the hit movie “Wicked” from Universal Pictures along with the relative rise in the U.S. Equity markets as represented by the SPDR S&P 500 ETF Trust (SPY) versus the iShares MSCI ACWI ex-US ETF (ACWX), we thought the above would be an appropriate title for this week’s ChartTalk.
Although there are several reasons why the U.S. market regularly outperforms global stock indexes, we think that the primary ones include the fact that U.S. companies, powered by their employees, are much more productive and innovative than their foreign counterparts, have pristine balance sheets and operate within a system that is more transparent than most others.
As is illustrated by the chart below, it is also clear that since late September that divergence has become even more pronounced. Many believe, including us, that the economic agenda put forth by President-Elect Trump, one of deregulation, selective (hopefully) tariffs and the continuing to emphasize onshoring/nearshoring should help the United States maintain its position as the world’s preeminent economy.
Despite our bullish short-to intermediate-term outlook, investors must recognize that over the past twoyears stocks have come a long way. Inasmuch, such a pullback, when it comes, should be welcomed andnot feared. That said, over thelong-term we are concerned that Trump’s agenda, as did that of Kamala Harris, doeslittle to reduce our national debt, which at some point will matter a greatdeal to investors.
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