View from Toronto Video: Eurozone, Far East, Australia Markets Cheaper

12/20/2017 11:45 am EST

Focus: STRATEGIES

Ziad Jasani

Managing Director and Partner, Independent Investor Institute

The bulk of North American markets are more expensive than Eurozone, Pacific, Australia and Emerging Markets. More on global markets in two videos from Ziad Jasani of the Independent Investor Institute.

video 1

Watch my video analytics session going into the  U.S. House vote on taxes recorded Tuesday, Dec. 19:

video 2

chart 1

Major Index Direct Price Regression
This tool gives us a quick snapshot of whether major global trading blocs are on the cheaper or expensive side of annualized routines.

The bulk of spaces in North America present as expensive. EFA, EEM present as cheap in USD terms.

The TSX is dislocated and expensive along with the S&P 500, Russell 2000 and Dow. This implies that positive catalysts are required to hold the highs, negative catalysts would be met with stronger selling pressure this week, as the “elastic-band” is stretched to an extreme.

chart 2

Trading Bloc Positioning
When comparing major trading blocs (EEM, EFA, SPY, TSX/EWC) to the entire world of equities (ACWI), we are able to identify which blocs are relatively cheaper (easier path for money to flow in) vs. which blocs are relatively expensive (harder for money to flow in).

The third column within the chart depicts the Eurozone, Far East and Australasia (EFA) and Emerging Markets as cheaper, while North American Markets (SPY, DIA, IWM, TSX) except the Nasdaq continue to present on the expensive side.

If the USD softens this week and if equity markets remain pointed north, ACWX, EFA, EEM and QQQ would be better trading/accumulation opportunities.

If a bout of volatility presents the S&P 500, Dow, Russell 2000 and TSX along with Russia and Japan, this may suggest the most downside risk.

View the Independent Investor Institute trading ideas and strategies videos here.