From: lessgovt@gmail.com   
      
   Investors Are Putting America First Again   
   By Hardika Singh and Brenda León, June 21, 2023, WSJ   
   U.S. stocks are zooming past their international counterparts yet again.   
      
   The S&P 500 has risen 14% this year, beating an 8.2% advance by the MSCI All   
   Country World ex USA Index, which tracks developed and emerging-market stocks.   
      
   Investors are tiptoeing back into U.S. stock funds as well: They have added   
   money on a net basis to equities-focused mutual and exchange-traded funds for   
   three consecutive weeks, including $23.78 billion in the period ended June 14,   
   the highest weekly    
   sum since December. Such funds had outflows in 17 of the previous 21 weeks,   
   according to EPFR.   
      
   Interest in global stocks has faded over the same period. Global equity funds   
   just logged the biggest weekly net outflow since October 2022, posting net   
   outflows for five of the past nine weeks, after a run of inflows to start the   
   year. European funds    
   have logged net outflows for 14 weeks, U.K. funds for 23 weeks, and China and   
   Latin America funds are noting tepid flows.   
      
   Foreign-stock indexes are lagging behind, too. Mexico’s S&P/BMV IPC is up   
   12% this year, the pan-continental Stoxx Europe 600 has risen 7.6%, the   
   Shanghai Composite is up 3.5%, and Hong Kong’s Hang Seng Index is down about   
   2.8%.    
      
   “They don’t have fortresslike balance sheets like a lot of U.S. large-caps   
   have,” said Craig Sarembock, wealth adviser at Bartlett Wealth Management in   
   Cincinnati. He says he is looking to add to his holdings of tech and other   
   growth stocks,    
   pointing to their ability to weather a potential economic slowdown.    
      
   U.S. stocks have long outperformed other benchmarks around the world. Yet when   
   the S&P 500 dropped sharply last year on worries about higher interest rates   
   and red-hot inflation, strategists and investors were quick to predict that   
   global stocks were    
   poised to make an extended run. The S&P 500’s recent rebound suggests those   
   forecasts were premature.   
      
   Of course, U.S. stock funds still have a wide gap to close. So far this year,   
   they have suffered about $31 billion in net outflows versus net inflows of   
   roughly $13 billion for global stock funds, according to EPFR.    
      
   Much of the recent enthusiasm for U.S. stocks stems from a boom in interest in   
   artificial intelligence. Investors are scooping up shares of companies at the   
   forefront of a technology that they think will change the world in the coming   
   years.    
      
   Shares of Nvidia, the maker of the advanced graphics chips required for AI,   
   have about tripled this year, giving the company a $1 trillion valuation.   
   Other tech stocks have soared as well. Facebook parent Meta Platforms and   
   Tesla have more than doubled.    
   Microsoft, which unveiled a $10 billion investment in OpenAI’s ChatGPT, has   
   risen more than 40%, as have Apple and Amazon.com.   
      
   More broadly, investors are optimistic about the U.S. because consumers are   
   still spending freely, the labor market remains robust and the banking-sector   
   crisis appears to have ebbed, at least for now. Plus, many investors are   
   hoping the Federal Reserve    
   is nearing the end of its interest-rate-raising campaign, which they expect   
   will give markets more room to run.   
      
   The eurozone, on the other hand, has slipped into a recession, and the   
   continent continues to battle high energy and food costs. Plus, the continuing   
   war in Ukraine is a source of uncertainty for the region. While the U.S.   
   economy is 5.4% larger than it    
   was before the Covid-19 pandemic struck, the eurozone economy is just 2.2%   
   bigger.   
      
   Elsewhere, the reopening of China’s economy after three years of stringent   
   Covid-19 lockdowns has sputtered, dampening investor interest in China-related   
   bets. Retail sales growth has slowed, and a recent bundle of data on factory   
   output, exports and    
   investment came in much weaker than economists were expecting. Economic growth   
   is expected to slow from the breakneck speed of recent years.   
      
   To be sure, there are outliers in international markets. Japan’s benchmark   
   stock index, the Nikkei 225, is up 29% this year and hovering near a 33-year   
   high, thanks to a rapidly expanding economy and a central bank committed to   
   low interest rates.    
   Meanwhile, in France, big gains in shares of luxury brands have helped push up   
   the country’s blue-chip stock index to records recently.    
      
   International market economies have also benefited from a weaker dollar, which   
   makes it cheaper to import foreign goods. The U.S. dollar, the world’s   
   reserve currency, has declined about 8% from the multidecade highs hit in   
   September 2022.    
      
   In a potentially bullish sign for international stocks, the rally in Japanese,   
   Mexican and European markets appears to be broadening. The percentage of   
   stocks moving above their 200-day moving average, a measure of breadth, is   
   higher than in the U.S.,    
   where the rally is dominated by a handful of stocks. Some investors fear the   
   narrow rally leaves the U.S. market vulnerable to a pullback if even one or   
   two big companies misstep.   
      
   “A rising tide lifts all boats, and that’s what you’re seeing in   
   Japan,” said Todd Jablonski, chief investment officer and head of asset   
   allocation at Principal Asset Management. “In the U.S., there’s a very   
   quick narrow stream moving through    
   a smaller body of water, while the rest of the ocean stands still.”   
      
   Jablonski says he is paring his exposure to U.S. and Chinese stocks while   
   adding to his positions in other developed markets and Latin American shares.   
      
   Plus, some corners of the international stock market still look cheaper than   
   the U.S. The Hang Seng Index is trading at 9.5 times expected earnings over   
   the next 12 months, while the Mexico S&P/BMV IPC and the Stoxx Europe 600 are   
   trading at 12.9 and 12.   
   7 times earnings, respectively. All three multiples are below their 10-year   
   averages.   
      
   In comparison, the S&P 500 is trading at 19 times earnings, above its 10-year   
   average of 17.6.    
      
   Jon Bell, global equity income portfolio manager at Newton Investment   
   Management, is investing more in value-style European stocks, pointing to   
   their cheaper valuations and higher dividend yields.   
      
   “Growth is really only outperforming in the U.S.,” he said “In   
   international markets, it’s still more value and income characteristics.”   
      
   https://www.wsj.com/articles/investors-are-putting-america-first-again-61ae5dda   
      
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