Cumberland Advisors Market Commentary – International Stock Markets, First Quarter, 2020

Author: William Witherell, Ph.D., Post Date: March 23, 2020

International stock markets, like the US market, started the year on an optimistic note. The global slump in manufacturing appeared to be bottoming, and trade relations were easing.

Cumberland Advisors Market Commentary by William "Bill" Witherell, Ph.D.

The first quarter is ending, however, with global equities experiencing dramatic losses and volatility surging across all market classes. As this is written (March 20), stocks in the US are again falling. The iShares MSCI ACWI ex US ETF, ACWX, is down 29.5% year-to-date. Emerging market stocks are down slightly less, 28.4%, while in the Eurozone, now the center of the outbreak, stocks are down more, 34.2%. The accelerated selloff has spread to almost all risk assets except the US dollar. The rapid spread of the COVID-19 virus and the increasingly restrictive actions necessarily being taken by governments are causing a severe shock of uncertain duration to the global economy. At the least, for a number of countries, economic growth during the first half of 2020 looks likely to be very low or negative. The global economy is on the edge of a recession if not already in one.

The uncertainty that underlies the heavy risk-off market sentiment stems not only from the impossibility of knowing the severity and duration of the spread of the disease. Investors also do not know whether the promised massive and extensive monetary and fiscal actions by central banks and governments will be sufficiently effective in supporting their economies. A critical immediate concern for central banks is to address dislocations where markets are not trading on fundamentals. The steps being taken to address emerging liquidity concerns such as the Federal Reserve’s extension of temporary dollar swap lines to other central banks are already having a positive effect . More generally, authorities around the globe are stating their readiness to do “whatever it takes” in this war against the virus and its economic impacts. That determined effort should set the stage for the eventual recovery.

Our International Portfolios are widely diversified across advanced-economy markets and some emerging markets, mainly Asian, along with a cash reserve.

The one security mentioned, ACWX, is held in Cumberland Advisors International Portfolios. The writer does not own it.

Bill Witherell, Ph.D.
Chief Global Economist & Portfolio Manager
Email | Bio

Sources: Financial Times, CNBC

Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.

cumber map
Cumberland Advisors® is registered with the SEC under the Investment Advisers Act of 1940. All information contained herein is for informational purposes only and does not constitute a solicitation or offer to sell securities or investment advisory services. Such an offer can only be made in the states where Cumberland Advisors is either registered or is a Notice Filer or where an exemption from such registration or filing is available. New accounts will not be accepted unless and until all local regulations have been satisfied. This presentation does not purport to be a complete description of our performance or investment services. Please feel free to forward our commentaries (with proper attribution) to others who may be interested. It is not our intention to state or imply in any manner that past results and profitability is an indication of future performance. All material presented is compiled from sources believed to be reliable. However, accuracy cannot be guaranteed.