[ FINANCE ]
BEYOND WALL STREET
Time to reevaluate global investment strategies ?
By Bainer Michael Preiss
Based in Singapore , Rainer Michael Preiss is Partner & Portfolio Strategist at DAS Family Office
T he ancient Romans once claimed , " All roads lead to Rome ," reflecting their dominance over a significant part of the world . Since World War II , a similar notion has applied to global capital and financial markets , where all roads lead to New York City and Washington D . C .
Throughout much of the past decade , the US stock market , particularly the tech sector , has taken the lead globally . The US dollar has reigned supreme in the 24 / 7 global foreign exchange market , and over the last five years , the S & P 500 index ( SPY ) has outpaced the MSCI World Index ( URTH ) by an impressive 22.79 %.
Even in 2024 , the US market has outperformed global equities by 3.35 % year-to-date . Many investors worldwide continue to favor international investments , particularly in US markets , over their domestic and local stock markets .
However , how much longer , given the world ’ s current evolutions , can US markets maintain their dominance and outperformance ?
In the short term , concerns have arisen due to a weaker-than-expected US labor market , sparking fears of a recession . The Sahm rule — indicating a recession when the US unemployment rate ' s three-month moving average rises by 0.5 percentage points over the previous 12 months — has become a reliable predictor , despite limited signs so far of an economic slowdown . With the US accounting for approximately 20 % of global GDP and 16 % of global consumption , fears of a downturn have rippled across world markets , affecting commodity prices .
Moreover , the upcoming November US elections could introduce unpredictable effects on both domestic and global economies . Global investors might find it prudent to consider the potential impact of ' Trumponomics ' on Forex markets , Wall Street , sovereign debt , gold , crude oil , and copper .
If history serves as a guide , the themes emerging in the latter half of 2024 suggest that a ' Trump 2.0 ' scenario could lead to significant shifts in asset prices , geopolitics , and global money flows .
IN THE ‘ REST OF THE WORLD ’
Outside the USA , the planet continues to develop , challenging both the global dominance of the well-established financial markets and potentially reducing , or even potentially reversing , the performance gap between the US and global markets .
As Asian markets , in particular , continue to mature , they could become viable alternatives to US markets . Notably , Red China now boasts more publicly listed companies
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WEJ | September 2024