Second Half 2023, Part Three: International Equity and the Dollar

From March 2020 to March 2023, the Dollar has been the undisputed king of currencies, and that needs to change for us to make progress. 

Fortunately, I believe it will,

I will explain below:

Over the last 50 years, there have been periods where the global market has outperformed the American market. However, I have written about the opposite several times for those of you who are long-term recipients of my emails. American outperformance has been the gold standard since 2008, leaving other international investments in the dust. However, for the first time in a long time, we are entering a period of global outperformance relative to our domestic markets.

How does this happen? How will we know?

It also concerns global bond yields, debt management, fiscal responsibility, and Sovereign Investments.

Our country has 32 trillion dollars in debt, including another 15 trillion in consumer debt and several trillion more in mortgages, state and corporate debt. Nauseating, I know!

Suppose interest rates in the United States fall and rise internationally [outside the USA]. In that case, pension funds, hedge funds, insurance funds, sovereign wealth funds, banks, etc., will divert money to seek the highest yields in sovereign debts. That will put a lot of pressure on the Dollar.

In addition to the Dollar cycle, we are in the early innings.

I touched base in the introduction letter. Major importers who relied on China and Russia as suppliers of goods are looking elsewhere to establish long-term investments to help diversify goods and services. If this continues, it would be a welcomed diversification away from just looking at US stocks to grow.

Regards

 Christopher R Lakian