International Inflection Point?
MSCI ACWI ex-US minus S&P 500
5 Year Cumulative Return
Source: Bloomberg and Todd Asset Management based on monthly calculations
International stocks (MSCI ACWI ex-US) have underperformed US stocks (S&P 500) over the past 8+ years on the back of a double dip recession in Europe, a triple dip recession in Japan and slowing Emerging Market growth due to commodity price weakness.
We are beginning to see international markets firm up as the ECB, BOJ and PBOC throw the kitchen sink at their deflationary issues. International economic expectations are seeing signs of relative improvement compared to the US.
Markets tend to move in long cycles. Generational low global interest rates will continue to force investors to buy stocks. Our sense is the current cycle is changing to benefit international equities.
S&P 500 Index is a widely recognized index of market activity based on the aggregate performance of a selected portfolio of publicly traded common stocks. MSCI ACWI ex-U.S. (Gross) Index is a float-adjusted market capitalization index that is designed to measure the combined equity market performance of developed and emerging market countries excluding the United States. The ACWI ex-U.S. includes bothdeveloped and emerging markets. These index returns have been computed without reinvestment of dividends, do not reflect the impact of management fees or trading costs. These indexes are unmanaged and are not available for direct investment.
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