Below is a transcribed excerpt from today's edition of The Macro Show hosted by CEO Keith McCullough.
The Nasdaq is at all-time highs for a number of reasons: Tech earnings; U.S. growth accelerating over the last seven quarters; and Global #GrowthSlowing. It’s not one thing. It’s all of the above. So this is a story of U.S. growth being better on both an absolute and relative basis.
This finds its way into Europe.
Now the reason you’d buy U.S. Dollars instead of the Euro is because Europe is slowing and the U.S. is accelerating. U.S. economic data is symptomatic of a late cycle U.S. economy, while Europe has had a great run but losing steam.
That’s exactly what we’re seeing: Late cycle U.S. consumption, employment and wage growth and lots of high-frequency economic data slowing in Europe. Don’t forget that these new all-time highs in U.S. Consumer Discretionary and Tech were driven by a May Jobs report that was nothing short of fantastic.
At the end of the day, it is what it is.
Now, a lot of people on Wall Street are in the business of only marketing one strategy. Whether that be European or Emerging Markets equities, a lot of people on Wall Street missed this move because they’re not in the business of making this move.
A lot of people only have one strategy they’re marketing, like “Emerging Markets are cheap.” What’s super interesting right now about Emerging Markets, particularly as we focus on Brazil and Mexico, is that they’re slowing. And while everyone says they’re cheap, Emerging Market stocks are actually getting more expensive. Their stock markets are in free fall but getting more expensive because previous earnings assumptions are now falling off previous stratospheric forecasts that were at cycle highs.
Getting back to Europe. In my quantitative risk range model, the Euro can’t even rally to the top end of its daily risk range. That’s just embarrassing. Again, Europe is slowing and the economic data already reflects that.
So what’s the point? To reiterate, this is the U.S. being better on both an absolute and relative basis than economies around the world. Tech’s all-time highs simply reflect that.