Move Out of U.S. Assets and Rotate Overseas, Morgan Stanley Says

U.S. markets rose earlier this week as U.S. President Donald Trump said he would delay any additional tariffs on Chinese goods while negotiations are still underway for a permanent trade deal. Trump took to Twitter to punctuate progress in negotiations with the world’s second largest economy, but a definitive trade deadline has yet to be established.

I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues. As a result of these very……

— Donald J. Trump (@realDonaldTrump) February 24, 2019

….productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement. A very good weekend for U.S. & China!

— Donald J. Trump (@realDonaldTrump) February 24, 2019

“The market seems to expect a grand ‘trade deal’ soon that marks a NAFTA2 -like quiet end to President Trump’s trade actions,” wrote Barry Bannister, head of institutional equity strategy at Stifel, in a note.

In the video below, Andrew Sheets, chief cross-asset strategist at Morgan Stanley, discusses inflation, asset allocation strategy and emerging markets. He speaks on “Bloomberg Surveillance.”

For investors looking for the continued upside in emerging market assets, whether driven by a weakening USD or continued developments around trade, the Direxion MSCI Emerging Over Developed Markets ETF (NYSEArca: RWED) offers them the ability to benefit not only from emerging markets potentially performing well, but from emerging markets outperforming developed markets.

Conversely, if investors believe that resolutions to the big issues impacting sentiment today are in motion, the Direxion MSCI Developed Over Emerging Markets ETF (NYSEArca: RWDE) provides a means to not only see developed markets perform well, but a way to access a convergence/catch-up in performance of DM relative to EM, a spread that has clearly widened over the past 6 months.

For more market trends, visit ETF Trends.