By Carl Delfeld of Chartwell ETF and Chartwell Partners Asset Management
During the past month, the S&P 500 (SPY) has been up over 4% besting every country ETF with the exception of India which has come alive after its government survived a no confidence vote over the US-India nuclear deal.
And while the S&P 500 has fallen 12% year to date, Brazil has fallen by 15%, Russia and India by over 20%, and China’s Shanghai Composite by close to 60%.
The fall in commodity prices has hurt resource rich countries, such as Russia and Brazil and concerns about inflation and lower growth have hurt China. The Financial Times also points out that relative valuations alone suggest US assets will continue to outperform BRIC. BRIC stock markets are trading on an average 15 times earnings, right in line with the S&P 500.
Furthermore, the flexible and dynamic US economy has so far weathered the massive hammer blows of high oil prices, mortgage-backed security fiasco, and declining real estate prices relatively well. And after an almost three year decline in the dollar, US exporters may now be the world’s new growth story. The US trade deficit shrank by 10% month-on-month in June though the dollar is trending up, especially against the Euro.
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