Bye Bye Miss American Pie
Or, has TINA left the building?
“U.S. investors continue to follow the printing presses into European and Japanese equities. A record that has been held for nine years is almost sure to fall.”
–David Santschi, CEO of TrimTabs
Wall Street has always been great at expressing ideas in acronym format.
Meet TINA, which applies a label to the one of the main factors propelling U.S. equities prices over the last year or so: There Is No Alternative. That is, Europe, Japan, and China, among others, have been a weak alternative to the U.S.
The strength in U.S. markets themselves largely resulted from the liquidity supplied by quantitative easing policies by the Fed; much of the liquidity intended for the economy found its way into financial assets.
Now some of that liquidity has moved to Europe, China, Japan, and Israel. Fund that invest globally, including ETFs, are on a pace that would break records for any four month period.
For American investors, of course, some of the gains in those offshore holdings were largely offset by comparative weakness in local currencies versus the U.S. dollar.
Of the 28 ETFs in my non-US watch-list, 25 of them, or 89%, are showing gains for 2015 (to April 14). The average gain for all 28 was 7.6% versus 2.0% for the S&P 500. The three countries that are down so far in 2015: Canada (down 0.8%), Brazil (down 2.8%), and Turkey (down 14.3%, talk about cold Turkey…).
Top performing countries, those with momentum: Russia (+31.2%) , China (+22.3%), Hong Kong (+17.2%), Japan (+14.9), and Israel (+12.1%).
Each of these winner rose after rebounding from their respective low points in their Relative Strength Indices. Hong Kong had a double bottom.
