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Jefferies Wood says best over for US stocks, sees more losses

random opinion :: 8hrs ago :: source - bloomberg

By Winnie Hsu

(Bloomberg) — The US stock market is well past its best days and investors should be prepared to see further declines in the nation’s equities, Treasury bonds as well as the dollar, according to Christopher Wood of Jefferies Financial Group Inc.

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The market value of US stocks as a percentage of the MSCI All Country World Index reached its all-time high in late December, said Wood, the firm’s global head of equity strategy. “The US has made an all-time peak,” he said, likening it to the Japanese market in 1989. “The dollar has begun a long-term weakening trend, and that’s going to reduce the US stock market capitalization as percentage of the world.”

Investors should consider adding Chinese, Indian and European assets in rebalancing their portfolios, Wood said.

The veteran strategist’s bearish view on US markets echoes the pessimism spreading across world markets that the era of American exceptionalism is ebbing, with President Donald Trump’s chaotic rollout of his tariffs.

US stocks occupy about 60% to 70% of world stock market capitalization, but its economy doesn’t make as much in global wealth, he noted. “It’s an extreme of valuation relative to other markets. Japan’s valuation at the end of 1989 was extreme.”

READ: Janus Henderson Weighs 10% Cut in US Assets After Trump Turmoil

US equities have narrowly averted a bear market, a far cry from their record streaks earlier this year. The S&P 500 has bounced from this month’s low, but its year-to-date 8.6% drop lags European and Chinese benchmarks.


“It’s not just a question of the US going down. It’s a question of Europe, China and India going up,” he said.

Most global investors don’t have an exposure to India, Wood said. “I’m saying they should. Any global emerging market investors tend to own India. I’m saying global funds should own India too.”

READ: Citigroup Turns Cold on US Stocks, Joining Wall Street Peers

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