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In this episode of Stocks in Translation, New York Stock Exchange Senior Market Strategist Michael Reinking joins Markets and Data Editor Jared Blikre and Yahoo Finance Anchor Madison Mills to discuss market rotations in the U.S. and international markets. Reinking breaks down two trends investors are watching coming out of the United States, Europe, and China impacting markets.
To hear more of Reinking’s thoughts, watch the full interview here.
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This article was written by Lauren Pokedoff
How do you think about the rotation though, is it enough to sustainable?
Well so, so I mean, so there's a couple different things going on with the rotation, right? The expectation that we would see the rotation within U.S. equities, uh, was for that to happen kind of down the market capitalization scale. As we're seeing kind of concern, the rotation we're getting is up the quality scale. Right, and because there is some concern and there's more defensive posturing that's happening within the market. So we're seeing the large caps outperform and that area where, where investors had been hoping to see um, you know, kind of that rotation in the small mid cap. That's been underperforming. In addition, what we're also seeing is uh,
Mm-hmm.
um, international markets have started, have started to kind of outperform U.S. markets. Right? So you're seeing kind of strength in Europe, you're seeing, you know, China, which was, you know, just not too long ago, was considered uninvestable, right? Is all of a sudden coming back with as we've seen stimulus coming into that country. And then the deep sea headlines, you know, over the last few weeks. Right? So you're seeing that rotational activity happen in ways that, um, I don't think most people were necessarily expecting.
Right.
No. <noise> There's Europe for you. People didn't expect that. How long does it last? Is this sustainable for? You know, is this a longer term trend that we have in the making?
Yeah. <noise>
Right? Well, so I don't, I'm not quite sure how, you know, how long the trend can continue. Right? I mean, it's it's not when you look at Europe, you can understand there is, we're seeing some fiscal austerity here, right? And you're seeing kind of more headlines about increased fiscal spending happening at the European level. Um, you know, but it's it's not as if those economies are kind of gangbuster. The other, kind of, the other piece of that equation is that you're looking at other areas of the market that are just trading at, uh, nice relative values or cheaper than U.S. equity markets have, you know, are currently trading. Right? So that's giving you a little bit more of a buffer, and that's kind of helping, helping money rotate into those areas of the market. Uh, I don't think it necessarily, like that can happen and U.S. markets can also continue to perform well. I don't think it necessarily just kind of that binary outcome that we just talked about. It doesn't need to be, it doesn't need to be one or the other. I think both can perform.
Mm-hmm.
Yeah, there's no other.
