Heading into 2018, I listened to many strategy calls from the leading Wall Street players and the consensus view was pounding the table on international stocks over US stocks. Their call was in favor of international because of cheaper valuations and long-term under-performance. This didn't sit well with me. Sure valuation is cheaper but there is a reason for it. The European economy has been recovering from significant issues with a deep Greek recession, the surprise Brexit, and Deutsche Bank whose stock is trading below its crisis 2009 low. Just this week, the ECB cut their growth forecasts and announced they will keep rates at record lows for at least another year.
The Global Bear Market has Reached US Soil
You are probably aware that the US markets are off to their worst start in recorded history. However, many media commentators are bear market deniers and believe that there isn't a bear market at all. Stocks will go up forever. If there is a correction, deniers believe that the Fed will just restart its quantitative easing programs, and stocks will continue their ascent to infinity.
I'm sorry to tell you that if you look at the data, the global financial markets are already in a deep bear market, and the world central banks have been ineffective in printing their economies out of recession. Today, I believe that the US is being pulled down by international forces beyond our control. Therefore, the US economy is likely headed for recession in 2016. Let's take a quick look around the world to see the carnage.