At a review of the reasons for the relatively poor performance of US shares as compared to the rest of the world this year. Inflation, earnings and the twin deficits are all cause for poor market sentiment. Eventhough domestic investors have focused on the overseas markets, i.e. mutual fund flows, there is some reason for optimism:

Are America’s shares now poised to close the gap? A couple of short-term indicators are less than bullish. For one thing, analysts have steadily raised the bar in their earnings forecasts, making it increasingly likely that companies will stop beating and start missing their targets. Investors often punish that. And for another, the number of companies suspending their dividends rose last month: to 11, from a monthly average of under three, points out Mark Hulbert, a market commentator. Though only a few firms are involved, the trend may be significant: much academic literature suggests that when a company suspends its dividend, returns on its shares fall over the next 12 months.

The broader outlook is more encouraging, however. Most forecasters believe that America’s growth will continue to outpace Europe’s. Equity valuations are more in line than they were. And the bloom is slightly off various developing-country roses. The dependence of Asian countries on imported oil, a possible peak in commodity prices and some emerging political risk in Latin America are all things that investors are keeping an eye on. Nor does Japan fill everyone with confidence, for it is foreigners, not locals, who are pouring the money into shares there.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.