Good morning! Just like markets, Opening Bell Daily will be off Thursday, then back in your inbox on Friday.

Have a wonderful Thanksgiving — now let’s talk stocks.

Today’s letter is brought to you by Public!

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If you’re looking to earn steady interest — even as rates change — head to Public.

US exceptionalism is a winning play

The classic investment advice for investors to spread bets globally has become as outdated as a paper map in a digital world. 

When it comes to financial markets, US exceptionalism isn’t just a narrative — it’s a data-backed reality that underscores how far international equities have lagged.

Recent history suggests the benefits of global diversification aren't worth taking a potential hit on American public companies. 

So far in 2024, there’s little to compare when you put the US benchmark index against those tracking non-US developed economies and emerging markets: 

When you zoom out to the ten-year compounded annual gains for the three stock indexes you find a similar result, according to historical figures tracked by DataTrek Research: 

Those gains — and missed returns — add up fast as years compound, even for a portfolio that allocates a modest 10-15% to non-US stocks.  

What’s telling, too, is that correlations between the US and non-US benchmarks seem to converge most during times of crisis.

That’s what happened during the economic and market tumult seen in 2008 and 2020, for example.  

In effect, diversification fails just as investors need it most. 

“Even worse, when correlations decline it’s usually because US equities are trouncing rest-of-world stocks,” said DataTrek co-founders Nick Colas and Jessica Rabe. 

With a second Trump administration weeks away, it’s useful to remember how the above three indexes fared during his first stint in the White House.

Before the pandemic hit in early 2020, US stocks dramatically outperformed amid Trump-era trade policy and a focus on domestic economic growth. 

Colas and Rabe highlighted that not one major single-country equity market beat the S&P 500 during Trump’s first term. 

“The cost of international diversification has gotten very high, as it was during President-elect Trump’s first term,” the strategists said. “We don’t see that ending over the next 4 years.”

Comments or feedback? Reply directly to this email or let me know on X @philrosenn.

Elsewhere:

📊 The Fed’s preferred inflation gauge is due. Price growth has been stickier than policymakers like in the last couple months. Economists except annual core PCE to come in at 2.8% in October, up from 2.7% the prior month. Most Wall Street firms nonetheless maintain a forecast for a Fed rate cut in December.

⏱️Fed minutes just dropped. Central bankers signaled that all 19 officials approved of this month’s quarter-point cut. Officials believed that it would be appropriate to “move gradually” toward a more neutral interest rate if the economy stays in line with expectations. (WSJ)

📉 Wall Street looks calm for the holidays. The VIX — or the “fear gauge” — continues to trend lower one day away from Thanksgiving. A reading below 20 is considered normal volatility. It fell 4.8% to 13.9 on Tuesday, which suggests markets are in a bit of a lull until further notice. (Barron’s)

Rapid-fire:

Interview:

I sat down with Anthony Pompliano to discuss bitcoin’s recent pullback from $100,000, MicroStrategy’s trend-setting buying-spree, and the outlook for the crypto bull market.

Last thing:

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Disclosures:

*Rate as of [11/26/24]. APY is variable and subject to change

** As of [9/16/24], the average, annualized yield to worst (YTW) across all ten bonds is greater than 6%. A bond’s YTW is not “locked in” until the bond is purchased and is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond.

Paid endorsement for Public Investing, Inc. Not investment advice. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. 

Treasury accounts offering 6 months T-Bills are offered by Jiko Securities, Inc.,member FINRA & SIPC. Securities in your account are protected up to $500,000. For details: www.sipc.org. Banking services and the Bank Accounts are provided by Jiko Bank, a division of Mid- Central National Bank. For U.S. Investments in T-bills: Not FDIC Insured; No Bank Guarantee; May Lose Value. Treasuries risk disclosures, see https://jiko.io/docs/treasuries_risk_disclosure.pdf. See public.com/#disclosures-main 

A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC and includes 10 investment-grade and high-yield bonds. As of [11/08/24], the average, annualized yield to worst (YTW) across all ten bonds is greater than 6%. A bond’s YTW is not “locked in” until the bond is purchased and is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. While corporate bond yields should fall in reaction to a Federal Reserve rate cut, there is no way to know whether that will be true of the bonds in the Bond Account, how quickly bond yields will respond, or by how much they will decline. Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. All investing involves risk. Public Investing charges a markup on each bond trade. Visit public.com/bond-account to learn more