Blogs


Not the Year of the Dollar

A new year brings a fresh opportunity to reflect on the year that’s past.  For U.S.-dollar investors who allocated funds abroad last year, it’s a happy reflection.  Take a look at the graphic below, which shows the U.S.-dollar returns of the top ten GDP contributors of the world.  China posted staggering results, up 54%, with India a distant second at 39% (still incredible!).  The U.S. market was next to last.  Only our friends up north underperformed, and that’s largely an energy story.

2017 USD Country Return Quilt

This marks the first time since 2009 that the U.S. has been in the bottom half and it’s the worst relative performance since 2007.  Dollar weakness was one of the main drivers, as the trade-weighted dollar fell 8.6% in 2017.  If we take out the impact of the dollar and look only at local market returns, the U.S. ranked fourth.

2017 Country Return Quilt

So what’s to come in 2018?  Will U.S.-based investors benefit again from their international exposure?  I believe the answer is yes, but it will come from outperformance in local stock markets rather than being dollar led.  U.S. valuations are getting extreme and the Fed is diverging from the global central bank trend by both raising rates and removing liquidity.  While the U.S. economy may outpace its international counterparts, increased growth raises the possibility of inflation, which could spell trouble for equities.  While my crystal ball is far from perfect, I’d expect to see the U.S. in the bottom half of both graphics this time next year.

HighTower Las Vegas is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.