Mind The Gap
Source: Datastream and UBS
US profits (dark line) are currently +30% above their pre-crisis levels while International profits (light line) are roughly -30% below. Since the trough in profits in 2009, the S&P has returned approximately 210%, over twice as much as the ACWI ex-US. We think the profit and performance gap between the two regions should close to favor the ACWI ex-US now.
Since 2009, the US has remained more consistently accommodative than other central banks. Therefore, US economic growth and profits remained in expansionary territory while many international regions faced multiple recessions (Europe 2011-13, Japan 2010-12 & 2014-15, Emerging Markets 2014-15).
As we pointed out in our last Chart of Interest Time To Learn a Foreign Language international growth estimates are expected to accelerate vs. the US, which should help close the gap in profits seen above and could fuel a multi-year period of better International returns relative to US.
This publication has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Past performance does not provide any guarantee of future performance.