Are US equities too expensive? Yes, but…
According to traditional valuation metrics, US equities are expensive. In this analysis, we provide two arguments for continued outperformance of US equities, and two in favour of better performance of non-US equities.
It's the dollar, stupid!
Central banks and governments around the world are once again engaged in a ‘currency devaluation’ contest. The US dollar has been on a sharp downward trend in recent weeks. This has had a significant impact on financial and real assets.
The chart below, which we borrowed from Hong Kong investor Puru Saxena and goes back all the way to 1980, suggests the dollar indeed is on a long-term downtrend.