Time to avoid US equities

As I write these words, the news out of Washington, DC is that a fiscal cliff deal has reached an impasse in the Senate. Nevertheless, I was surprised to see ES futures up modestly. Regardless of the outcome of the fiscal cliff negotiations, a review of global equity markets indicate that the leadership is outside the US and a fiscal cliff relief rally (when it comes) would be a good opportunity for American investors to diversify their holdings outside the country. Consider this chart showing the relative returns of US stocks compared to MSCI All-Country World (ACWI). US equities peaked out on a relative basis in July and have been underperforming global equities ever since. Despite the sunnier outlook shown by the American economy relative to many parts of the world, this analysis shows that the outlook for US equities may not be so bright in 2013. When we analyze the weighting...