By Sage Advisory

1. Coming into the year, we experienced synchronous global economic growth, and expectations for more growth was high across regions. The U.S. was able to meet those expectations while other major regions, especially Europe, disappointed. Emerging markets are suffering from political tensions, a strong dollar, and tightening monetary policy.

Economic Surprise Index

2. Trade tensions have had a more negative effect on international equities than U.S. equities. The most recent episode on trade tensions, which began on March 22, sent equity markets lower, but only the U.S. market has recovered.

US and International Equities YTD Return

3. Earnings for U.S. equities are growing at their fastest pace since 2010, setting a high bar. Earnings must continue to grow at an above-trend pace or multiples must expand from already high levels to see upside in equity prices.

SP 500 Earnings YoY

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