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Int'l Macro Vision: Sector Synopsis

Int'l Equity Strategy



Intact YTD downtrends on the broad MSCI global indexes (ACWI, ACWI ex-US, EAFE, and EM) combined with rapidly rising global interest rates/U.S. dollar, high inflation, and restrictive monetary policy continue to support our bearish intermediate-term outlook. As long as these downtrends remain intact, we are bearish at the index level, and we expect more volatility and lower prices ahead. With that said, in the short-term we see potential for a bear market rally to the aforementioned downtrends, with MSCI ACWI ex-US (ACWX-US) and MSCI EAFE (EFA-US) each testing support at their respective downtrend channel, and MSCI ACWI (ACWI-US) testing support at the prior downtrend drawn by connecting the April and June highs. It is possible that recent emergency intervention (gilt buying) by the Bank of England, announced on Sept. 28, could be viewed as central banks starting to “pivot,” which would provide a potential catalyst for a short-term bounce – and possibly more. Of course, if the U.S. dollar (DXY) and/or 10-year Treasury yield break above their September highs, all bets are off and we would expect equities to continue lower. Areas that we find attractive and actionable continue to be located in Japan, India, and Brazil, and are generally not Sector-specific – remain overweight these countries.