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Int'l Macro Vision: Sector Synopsis

Int'l Equity Strategy



Since early November 2023 we have been expecting global equities (MSCI ACWI) to stage a year-end rally that would continue into the early part of 2024. As we progress through the “early part” of 2024, the main potential concern that could derail this bull market is a continued move higher in the U.S. dollar (DXY) and global sovereign 10-year yields. Ultimately, we believe any weakness in ACWI-US is likely to present a buying opportunity as long as the 10-year Treasury yield remains below 4.35%, and the DXY remains below $106. These are critical thresholds moving forward.

As discussed in our latest Int'l Compass (Feb. 2, 2024), short-term support remains at $102 on MSCI ACWI (ACWI-US), while longer-term support remains at $98-$99. A break below $102 would indicate that more consolidation is likely but, as long as ACWI-US remains above $98, we remain bullish on global equities, and we view pullbacks as buying opportunities.

We continue to see many reasons to be bullish on global equities, including: (1) The 10-year Treasury yield (a proxy for global yields) remains below major resistance at 4.35%. (2) The U.S. Dollar (DXY) remains below major resistance at $106. (3) MSCI ACWI (ACWI-US) remains above short-term support at $102, and well-above longer-term support at $98-$99. (4) Uptrends remain intact for major countries (in terms of global market capitalization share) including the U.S., Europe, and Japan. (5) U.S. and European high yield spreads are at 24-month and 22-month narrows, respectively. (6) Defensive global Sectors including Consumer Staples (KXI-US) and Utilities (JXI-US) are hitting 16+ year RS lows (vs. MSCI ACWI). (7) Breadth remains healthy. (8) U.S. and non-U.S. small-caps are no longer underperforming. The significance of all of these risk-on signals cannot be understated, and we continue to see this as a bull market until proven otherwise.