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Business Insider
07-06-2025
- Business
- Business Insider
Stocks are on the verge of flashing 2 big sell signals as investors pile into the market at a historic pace, BofA says
Things have been good for stocks over the last two months. Maybe too good, according to a new report from Bank of America. Since its most recent low on April 8, the S&P 500 and Vanguard's Total World Stock Index are up 20% as investors have piled into the market at a near-record pace. On an annualized basis, 2025 has seen the second-highest inflows into global stocks ever, trailing only 2024, BofA's Chief Investment Strategist Michael Hartnett said in a client note Friday. For US stocks, it's the third-highest year ever, after 2024 and 2021. Yet, amid the bullish frenzy, Hartnett said global stocks are approaching two sell signals. The first is the amount of money flowing into global stock funds. If they hit 1% of their current assets under management within a four-week span, the sell signal is activated. Over the last four weeks, flows totaled 0.9% of the funds' AUM. To hit 1%, flows would have to hit $30 billion in the "coming weeks," Hartnett said. The second is a breadth indicator that says when 88% of the ACWI countries' indexes trade above both their 50-day and 200-day moving averages, it's a sign that things are frothy and investors should sell, Hartnett said. Currently, 84% of ACWI countries' indexes are higher than their moving averages, meaning the market is in "overbought territory," Hartnett said. Both of Hartnett's sell indicators are in line with the conventional wisdom of contrarian investing espoused by legends like Warren Buffett. When the market is overwhelmingly bullish, good news is already priced in. When investors are bearish, it's an opportunity to buy stocks at a discount, the thinking goes. But sentiment gauges have sent mixed signals over the last couple of months. While inflows are strong, the AAII Investor Sentiment Survey shows investors are still net bearish. Bank of America's own Bull/Bear indicator shows the market's aggregate attitude hovers somewhere between optimism and pessimism, with a slight tilt toward the former. Breadth indicators are broadly in line with Hartnett's measure. Stocks of all stripes are doing well. Like Hartnett, Liz Ann Sonders, the chief investment strategist at Charles Schwab, said in a May 27 report that the robust breadth levels could be a cause for concern in the near-term. "Early-April setup was ripe for rally on good news given washed out sentiment/breadth and deeply oversold market," she wrote in a note co-authored with Kevin Gordon, a senior strategist at Schwab. "Setup now is not at opposite extreme." While breadth and sentiment can be contrarian indicators, it should be noted that the momentum factor has been king over the last decade and a half. What has done well (mega-cap tech stocks and popular indexes) has continued to do well, and steep declines in the broader market have generally been short-lived. That could still be the case going forward. Beyond technical indicators, investors are also monitoring fundamental measures of the economy's health. The macroeconomic picture remains unclear as business owners and consumers digest President Trump's tariffs. Concerns persist about how the import taxes will affect consumer prices and growth. The US economy added 139,000 jobs in May, more than economists expected, but the number wasn't a sure sign that the labor market remains solid, as April and March data were revised down. Long-term Treasury yields also continue to rise as Trump's tax bill fuels investor concerns around inflation and the US budget deficit. A negative catalyst in the form of rising unemployment or higher inflation could spark a reversal in the ultra-bullish signals Hartnett is watching.
CNBC
06-06-2025
- Business
- CNBC
International stocks are ahead of the U.S. so far this year—how to add them to your portfolio
For investors, the U.S. has been the place to be in recent years. Over the past decade and a half, the S&P 500 — a measure of the broad U.S. stock market — has returned an annualized 14.2%. The MSCI ACWI ex-USA index, which measures the performance of stocks from pretty much everywhere else, logged a return of 6.5% over the same period. Since the start of 2025, however, investors are eschewing U.S. stocks in favor of international names. So far this year, the ACWI ex-USA index has returned 15.7%, trouncing the 1.5% return in the S&P. "In 2025 thus far, there are some clear indications that investors are adopting the 'ABUSA' ('Anywhere But the USA') mindset," says David Rosenstrock, a certified financial planner and director of financial planning and investments at Wharton Wealth Planning. "This shift is partly driven by concerns over market volatility in the U.S., uncertainty regarding policies and relatively weaker performance compared to global counterparts," he says. So is it time to invest in foreign stocks? Yes and no, say financial pros. You shouldn't make any wholesale changes to your portfolio mix based on short-term market results, they say. But if you have little or no foreign exposure, diversifying is likely a savvy move over the long term. Here's why. If you were born in the 90s, you may have never been invested during a sustained period during which foreign stocks outperformed domestic names, as they did in the back half of the 80s and much of the early 2000s. If that's the case, you may be tempted to continue ignoring foreign stocks, even after the recent uptick. "The problem is those trends tend to tend to reverse over time," says Amy Arnott, a portfolio strategist at Morningstar. "So even if the U.S. is outperforming over a very long period, like it did [in the 15 years] through 2024, eventually that trend reverses." While it may feel like the U.S. has dominated stock markets forever, it wasn't that long ago that foreign firms were delivering better returns. From 2001 to 2010, for instance, the ACWI ex-US index submitted a cumulative total return of 71.5% compared with a 15% gain in the S&P 500. Adding some foreign stocks to your portfolio can help guarantee at least some exposure to whichever side is performing better over the many years you're likely to invest. "True diversification means tapping into different economic cycles, monetary policies and growth drivers. It offers exposure to unique industries," says Marcos Segrera, a CFP and principal at Evensky & Katz/Foldes Wealth Management. "Furthermore, owning foreign stocks is a crucial way to diversify away from U.S.-specific risks." If you're looking to invest in foreign stocks, the most effective way to do it is by adding a low-cost index mutual fund or exchange-traded fund, says Arnott. "That way, you can get international diversification in one package and get exposure to a large number of companies and countries outside of the U.S.," she says. Market watchers generally divide foreign stocks into two camps: those that come from "developed" economies, such as those in Japan, Australia and several European countries, and emerging markets, such as China, India and much of Latin America. You can buy funds which invest in either, but "to keep things simple," owning a "total international stock" fund — such as one that tracks the MSCI ACWI ex-USA or something similar — will get you exposure to both, says Arnott. And while you may have powerful convictions about the future of a particular country and its economy, you'd be wise to avoid tilting your foreign exposure too much in that direction, Arnott says. Putting all your eggs in one country or region's basket, she says, can result in big swings in your portfolio. "It can be tempting to do that when there's a lot of excitement about Asia Pacific stocks or Latin America, or things like that," she says. "But it's difficult to use those types of funds in a portfolio just because they are more volatile, more narrowly defined, and people unfortunately have a tendency to sometimes see performance over the past few years and buy in at the wrong time."
Nikkei Asia
05-06-2025
- Business
- Nikkei Asia
Europe, AI drive global stock rally as Trump tariff fears ebb
TOKYO -- Global stocks are approaching all-time highs, fueled by investors encouraged by signs that U.S. President Donald Trump's tariff campaign is hitting its limits. The benchmark MSCI All Countries World Index, using local currencies and excluding dividends, rose to 1,060.787 on Wednesday -- nearly 2% below the record high marked on Feb. 18. The dollar-denominated version of the ACWI hit a record high on Wednesday, aided by the greenback's weakness against a range of other currencies.
Business Times
01-06-2025
- Business
- Business Times
How the US market fell from 4th to 41st for returns – and what it means for stocks in 2025
NEARLY two months after US President Donald Trump roiled markets with his on-again, off-again 'reciprocal' tariffs and universal 10 per cent levy, uncertainty remains. My last column showed the illogic underpinning this – and counselled patience. Here is an update – and how to profit. Trump says America 'wins' through his tariffs, reclaiming 'lost' manufacturing jobs and cutting the trade deficit. No. Tariffs always hammer most the one who imposes them. Don't take my word for it. Look to the markets. For any good capitalist, this is step one. Markets are a lie detector, weighing talk, forecasts and opinions – and rendering verdicts. Non-US stocks were up 8.8 per cent this year to May 22. The Straits Times Index gained 4.9 per cent, a hair's breadth from all-time highs. China? Up 10 per cent. European stocks rose 13.7 per cent. Mexico, up 20.7 per cent. US stocks? Down 5.5 per cent – a striking lag. If we look at it another way: Of the 47 MSCI All-Country World Index (ACWI) nations, America was 41st in the ranking of countries by their year-to-date returns as at May 22. In the same period last year, America was fourth – with its 28.8 per cent return fully seven percentage points ahead of the ACWI. Why did US stocks go from No 4 to 41? The answer is No 47; the 47th president, that is. Trump's vacillations make funds flee America. Markets know that attempts to reduce the trade deficit are senseless. A trade deficit means a capital account surplus by definition – that capital is foreign investment in the US. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Why would reversing that be desirable? Why would the government intervening to favour American firms, instead of letting free markets sort out the most efficient use of capital, be considered positive? Why would policy that seemingly changes on a whim be considered good? Stocks are seeing through the smoke and mirrors. America's lag tells you those things are bad, not good. My last column noted how Trump justified his 90-day reciprocal tariff pause on Apr 9 on the grounds that some 75 nations sought deals. Many claimed that this revealed Trump's true aim. The president's fans could say that tariffs, confusion and uncertainty are solely a leverage to strike a flurry of deals – delivering even freer trade. However, the markets are looking at reality, not armchair psychobabble. Deals to make more deals Since Apr 9, just two tariff 'deals' have emerged – one with Britain and one with China. Both are fluff. Britain's is a one-year, non-binding agreement to mitigate tariffs until a full trade deal happens. A deal to make a deal. It affects only a handful of industries. Crucially, the 10 per cent universal levy remains on most UK goods, just like for those from Singapore. America's China deal looks bigger, but only because the bar was incredibly low. Yes, it cut 145 per cent tariffs on Chinese goods to 30 per cent, while China dropped retaliatory levies from 125 per cent to 10 per cent. However, the 'deal' lasts only 90 days and effectively just buys time. Another deal to make a deal. Plus, tariffs on China remain 30 percentage points higher than in January. Both countries are worse off, but especially America. Who wins from this? Maybe Singapore, via re-exporting. On May 16, Trump flip-flopped again. Boasting that 150 nations now seek 'deals', he said that there isn't time to negotiate them all. His 'solution'? Telling nations what rates they will pay – and offering chances to appeal. Didn't he already do that on 'Liberation Day' on Apr 2? How will it work? Will rates be higher, lower or the same as those on Apr 2? He did not say, further fanning uncertainty. Then, days later, he threatened the European Union with new 50 per cent tariffs – and 25 per cent on Apple products. More uncertainty. Meanwhile, legal challenges to Trump's tariffs progress. Maybe real deals will come that will actually lower trade barriers and uncertainty – a huge potential upside. Then again, maybe not. But as my last column said, even if all tariffs return, the pain will be less than feared – which will be bullish for markets. Importers can readily skirt America's understaffed, overwhelmed tariff-collecting Customs and Border Protection staff via both illegal and legal means. The latter include 'tariff splitting' – stripping out services-related costs such as marketing to reduce goods' values – or storing imports in bonded warehouses. Or, shipping in goods that are valued to be under US$800. And myriad illegal ways such as misclassifying and undervaluing goods. Or, as mentioned, exporters can 'tranship' or re-export via lower-tariff nations – such as Singapore. This is why China's April exports didn't tank despite shipments to America tumbling 21 per cent. South-east Asia gobbled up the difference – and shipped them on. It drove Singapore's huge, 113 per cent year-on-year spike in April re-exports to America. Vietnam and Taiwan are seeing similar surges. Shippers could further tap Canada or Mexico, gaming the US-Mexico-Canada Agreement's tariff exemption. Hence, while April's total tariff collections rose, they missed administration forecasts by 75 per cent. That will persist. Happily, fear exceeds the negative effects, especially outside America. For investors, that is a recipe for a bull market – with non-US stocks continuing to lead. The writer is the founder, executive chairman and co-chief investment officer of Fisher Investments, an independent investment adviser serving both individual and institutional investors globally
Yahoo
21-05-2025
- Business
- Yahoo
Market ETFs: Major inflows are going into international equities
As the "Sell America" trade reemerges among US investors, the iShares All Country World Index ETF (ACWI) is outperforming the S&P 500 (^GSPC) year-to-date. Rareview Capital founder, CIO, and strategy shares portfolio manager Neil Azous sits down with the Catalysts team to talk more about international stocks outperforming US markets (^DJI, ^IXIC, ^GSPC) in 2025. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. US equities underperforming the rest of the world year to date with the iShares ACWI ETF notching gains over 5% compared to the half percent gain for the S&P year to date. So do the numbers back up the so-called sell America trade and what should investors do about it? Joining us to discuss, we've got Neil Zeus. He is Rareview Capital's founder and CIO, as well as portfolio manager of the Strategy Shares Monopoly ETF for this week's ETF report brought to you by Invesco QQQ. Thank you so much for joining us, Neil. So look, we know that investors are keen on the sell America trade, but I'm curious if you can talk about what you're seeing in terms of the flows here. Where are you seeing the most demand when it comes to equities outside of the United States? Sure. Hi Madison, good morning. Thank you for having me. Great to be here with you. Uh, so you're right. Uh, the all-country world index or the barometer for global equity beta or the S&P 500 for, uh, the global stock market is outperforming by about four and a half to 5% year to date. It's a pretty meaningful number if you were to think about that on an annualized basis, we would get over 15%. And then when you drill down, there are a couple of places that are outperforming. Uh, primarily Europe, which takes the bulk of it. So the Euro stocks index, if you're looking at it in, uh, dollar terms, uh, it would be up around 11% or in euro exchange rate terms, 21%. So it's having a very significant out performance. And if you were to drill down further, uh, Eastern Europe or the Eastern European block, especially Poland, uh, which can take the bulk of the flows over there is really having, uh, a substantial out performance. I think up 40 to 50% of the year on a variety of factors, primarily a release in the tensions around Russia and Ukraine. And so yes, the answer is, is inflows are going into international equities and the predominant beneficiary of that is European equities and then at a more micro level, Eastern Europe. Yeah. Uh, and the, the question becomes, is it's a philosophy question, right? Do you believe in global diversification? Even after many years of that not working. And that's really the big issue in the industry at the moment. How much do you put there? Is it a fake, a head fake like every year or is this time real? And this is something my guest host, Brian Levitt and I were just talking about. Brian, you got a question for Neil? Yeah, how do the inflows compare to the amount of money that we had seen going into the United States over the last number of years? Is it, does it look to you like if this trade continues, we're early on in this rebalancing from investors, or has there been a, a significant move already? I think that's a pretty fair question. Uh, Brian, nice to see you. Thank you. Uh, so if this was a baseball game and you had to, you know, translate what you just asked into innings, this would be like the first or the second inning. Uh, the reality is, is that the market caps in the United States are trillions of dollars overall larger than European equities. And so it doesn't take a, a lot of inflows to move those markets around. And so if this is a real event, and I would define real as not just fiscal expansion coming out of the European Commission or Germany specifically, but an earnings event where companies begin to earn a lot more money, we haven't seen anything yet. And, and, and this is by the way, after a decade of this underperformance. So, yes, you may have missed the initial low-hanging fruit, but if you believe in a secular change underway, there is significant runway. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
