December 9, 2023

Hot trends are cool...but still key for the rest of 23 years?Part 2: International and "Buffered"

Investors may now want to reduce international exposure and stick to their home markets.

Key Management chief executive Kim Arthur said global markets would struggle due to a weaker dollar.

“One of the highest predictors of future performance of international equities relative to U.S. equities is the dollar,” Arthur said on CNBC’s “ETF Edge” this week. “The dollar has been in a bull market from 2011 to 2022, so No matter what you do, you will lose money in international stock markets.”

friday, dollar index A 15-month low. This is about 10 months after hitting a 10-year high.

“The dollar peaked last September, okay? So you really have to have your own opinion on where the dollar is headed. We personally think the dollar is going down,” Arthur said.

Arthur, a former head of institutional sales and trading at Bank of America, believes the dollar will eventually return to a period of strength.

“We are way ahead of the rest of the world in fighting inflation. Our inflation numbers are lower than the rest of the world. Our interest rates are higher than the rest of the world,” Arthur said. “So what does that mean? It’s a perfect setup, we’re going to cut rates before the rest of the world. And that difference leads to a stronger dollar.”

Mike Akins, founding partner at ETF Action, cited another market dynamic that could hurt global stocks: strong interest in big U.S. tech stocks.

“You’re seeing more and more money continue to flow into U.S. equities … very little money is going into international markets. And that just happens naturally,” Akins said. “I’m not sure what the catalyst is, other than to say it has to start with those big names: Microsoft, apple, amazon, teslaNow Google (Alphabet). Those companies that create multiple expansions for the broader S&P 500 because they make up so much of it. That’s the catalyst to see value come back, to see international come back, to see emerging markets come back. “

As of Friday’s close, iShares MSCI Emerging Markets ETF It is up 8% this year. at the same time, S&P 500 Index up 17%.