A Year for Non-US Developed Market Equities

ECB QE, Stronger Dollar, GPIF / BOJ ETF buying – this is setting up to be the year of non-US DM equities. Beggaring thy neighbor, negative sovereign yields, and insane compression of credit spreads have/will cause a generational asset squeeze.

Are valuations too high and fake? Probably… but who cares. We discount by ~ (B * eqrp + rf). rf is negative. eqrp (at least the vol risk premium part) is restrained by central banks.

DAX – Up 17.4% YTD
NIKKEI – Up 7.4% YTD

I suspect Shanghai Composite is about to fall off a cliff though. Also, NFP tomorrow threatens to change the macro landscape / theme. SPX will continue to lag it’s global counterparts.

I’m uncautiously long… but will get cautious if I see an impending risky catalyst. There are no catalysts around… so buy the rallies & buy the dips.

PS – Been really too busy to post. I’m a bit worried that I’m compounding returns into a blowup “0”. Luckily, that hasn’t happened yet. I continue to take unbecoming magnitudes of risk, but will scale back into cruise control soon.

 

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