The proposed Fed balance sheet unwind and Trump’s tax cut plans have acted to strengthen the US Dollar from its 2017 decline. The Dollar was down over 11% from its Dec ’16 high and has recovered a few percent over the past month.
Good news for the US Dollar has put pressure on foreign markets. Overall International Markets are stagnant and Emerging Markets are down from their lofty highs. I believe this is just a needed consolidation and offers a secondary buying opportunity for investors that missed out on the International rally that started at the beginning of the year.
My broad international holdings include Vanguard All World ex-USA (VEU) and Vanguard Emerging Markets (VWO). Country specific ETFs in my portfolio are:
- Ireland (EIRL)
- Israel (EIS)
- Malaysia (EWM)
- Mexico (EWW)
I’ve used this pullback as an opportunity to add VEU, VWO & EWW to client portfolios that were under represented in these positions.
Mexico has especially come under pressure- NAFTA negotiations, earthquakes, hurricanes and politics have all had an effect. However, I’m still a big fan of EWW.
- see my thoughts on NAFTA: https://www.youtube.com/watch?v=T8OHDO_MVvQ
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