Market Performance: US vs World

Floyd Norris asks how well the US Market has done relative to other global markets.

The answer? On a comparitive basis, not great. Better than China, but not as good as 22 other national markets. 

Its not just the emerging markets, either: Austria, Norway, Finland, Greece, Spain, Canada, Germany, Ireland, France, Italy, Siwetzerland, the Netherlands, Japan, Britain and Hong Kong all out performed the United States. Norris notes that the "most impressive fact is how widespread stock market
profits have been throughout the world, despite all the talk of slow
growth in Europe and Japan."


The chart below shows which were the best performing regions in the world.

click for larger graphic


graphic courtesy of NYT

Here’s an excerpt:

"As for the United States, much of its economic vigor has helped companies in other countries as the American trade deficit has soared. Bob Prince of Bridgewater Associates, a money management firm, argues that a repricing of American assets is needed to continue drawing in foreign capital. He notes that the difference between American interest rates and those in Europe and Asia has been growing for more than a year.

If that continues, it will mean that American companies have to pay more for capital — either equity or debt — than overseas competitors. That will make it more difficult for them to compete. Mr. Prince argues the trend will continue until American growth slows enough — or the dollar falls enough — to begin to cut the trade deficit and thus reduce the American need for investment from overseas."


China and U.S. Are World’s Growth Engines and Its Market Laggards
Off the Charts
NYT, April 1, 2006

What's been said:

Discussions found on the web:
  1. muckdog commented on Apr 3

    Yeah, but we beat Slovenia!

    USA! USA! USA!

    Of course, when a chart like this comes out, is it time to sell Austria and India, and buy China and Slovenia?

    Does Rydex have a leveraged Slovenia fund yet?

  2. online trading commented on Apr 3

    China’s should not be negative. The graph should show the performance of the country’s companies not the performance of their markets.

    USA! USA! USA!
    – can’t resist a USA chant(reminds me of a Hulk Hogan comback). Maybe if we all chant hard enough the USA will move up on the list. Is this really an accurate picture of the US GDP vs. the world? What about inflation? This is depressing. Eat it Slovenia. EAT. IT. SLOVENIA.

  3. angryinch commented on Apr 3

    They should have used the 2003 bottom as a comparison since Europe and Japan bottomed in 2003, not 2002. The performance makes the US look even more anemic. The only US sector which has kept pace with the ROW is the smallcaps.

  4. thecynic commented on Apr 3

    can somebody explain the “US provides surperior returns therefore it is an attractive place for capital” argument?

    a shitty stock market and a bond market where the gov is inflating the currency.. hmm.. i don’t think so….

  5. Brian commented on Apr 3

    I wouldn’t have thought Austria would be on the top. I guess as a safe eastern european play? (Sort of like Australia is a safe China play). I don’t see my beloved Brazil on there.

    The US stock market confirming that we are, indeed, run by reckless fools?

  6. Nick commented on Apr 3

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  7. trader75 commented on Apr 4

    Anybody notice emerging markets were up huge on Monday?

  8. todd z commented on Apr 4

    This can’t be good for bond prices…

    —>China official urges cut in US debt holding
    China should gradually reduce its holdings of U.S. debt and can stop buying dollar-denominated bonds, Cheng Siwei, a vice chief of China’s parliament, was quoted on Tuesday as saying.

    It’s only one guy, but the chorus out of China seems to be getting louder.

    Here’s the 10 year bond price chart:$UST&p=D&yr=1&mn=0&dy=0&id=p67917863114

    Not so hot.

  9. Bastiat commented on Apr 4

    Oh mah gaahd! In three years time the US lags the world! AAAhhg, everybody run for the doors! Better yet, kill yourselves! There’s no hope. Women and children first! AAAHHHGGGGG@!!!!!!

  10. john commented on Apr 4

    Once more I am left out. The chart mumbles something about “change in leading stock market index, in dollars..”.

    What indices were used? What do they mean by leading? How was the conversion done from Austrian euros(?) to US dollars – what rate was used?

    Don’t most US indices include a whole lot of foreign companies? Don’t most foreign indices include a whole bunch of US businesses?

    This is seriously bogus. If I made a chart like this I’d probably have to show them as relatively even unless I controlled for the above. And I’m sure they aren’t controlled since most business news reporters are morons and Morgan Stanley, who provided the info, has their own agenda.

  11. jr commented on Apr 4

    This chart would be much more informative if a longer timeframe was depicted and the world’s ‘leading indexes’ were measured in something like gold to reflect local currency changes.

  12. Floyd Norris commented on Apr 6

    A quick note on me chart. It was not designed to show the best markets in the world, and in fact a number of emerging markets did better than the U.S.
    As for readers who ask which leading exchanges are included, they are generally the ones Bloomberg classifies in that way. Choices of different indexes would have moved some countries up or down, but not changed the overall picture.

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