Regional Strength

Dec 16, 2025

In a Chart of the Day from last month, as well as an update in Monday’s Morning Lineup, we highlighted the strong performance of assets out of Chile.  As shown below, Chile’s strength comes in the context of broader recent regional strength in Latin America. Since the 2024 US election, the Latin America ETF (ILF) now ranks as the second strongest region of the world behind Asian equities (AIA). ILF has rallied 23.87% through today, but was up over 30% at the high on December 4th.  Likewise, AIA has pulled back significantly since its high from the fall, including a lower low today.  As Asian and Latin American stocks have pulled back recently, European stocks (IEV) have held up relatively better. That includes a fresh high being hit yesterday.

For a closer look at country-level performance, below we show 25 country ETFs. For each one, we highlight their performance year-to-date, since the recent low for US stocks on 11/20, the distance from and date of 52-week highs, and trading ranges. Again, the best performing equities in the past couple of weeks, since US stocks put in a low on 11/20, have been in Europe.  Of those, Spain (EWP) has also been one of the best performers year to date with an over 70% gain.  There is only one country listed that has outperformed that: South Korea (EWY). EWY has rallied over 75% this year, with those strong returns coming thanks in no small part to the AI trade, including memory stocks like SK Hynix (we discussed this name in today’s Morning Lineup).  While South Korea has rallied massively year to date, it is also one of the countries furthest from 52-week highs (currently down 11.26%). Other Asian nations are also down more significantly from their respective 52-week highs, including China (MCHI), which, like South Korea, has fallen by double-digit percentages from its high. Given this, those same countries are now technically oversold, including some to extreme degrees.

Change happens fast in the market!

Weak NY Manufacturing

Dec 15, 2025

It was a light morning for economic data to start the week. One of the two releases was the New York Fed’s monthly Empire Manufacturing Survey.  After coming in at 18.7 in November, the second highest reading since April 2022, the index pulled back sharply to contractionary territory in December.  Albeit back into contraction, there was a lower reading as recently as September.  Countering that negative outlook for the region’s manufacturers was solid six month expectations.  As shown below (red line), expectations continued to climb in December with the 16.6 point month-over-month jump, ranking in the 96th percentile of all monthly moves on record.  Additionally, that is at the high end of the past few years’ range and nearly back to the historical median.

Looking under the hood, the weakness in the headline index comes on broad declines across most categories for current conditions.  In fact, of the eleven indices including general business conditions, only two rose month over month.  Further, eight of the eleven experienced bottom quartile monthly declines, which has resulted in roughly half of categories sitting in contraction.

Again, expectations were much better. Not a single category fell into contraction in December. In fact, the lone category formerly in contraction, Supply Availability, moved back into expansion.  As all expectation readings are now expansion, six of the eleven saw top quintile monthly gains. That includes big moves higher from ever-important categories like new orders, shipments, and unfilled orders. In other words, the December survey indicates that the region’s businesses observed weakness, but don’t see that weakness to be lasting.

To help quantify just how large of a disconnect there has been between current and future indices, below we show averages of those categories going back through the history of the survey. As shown, expectations generally hold a positive bias and it has been rare for current condition indices in aggregate to come in stronger than future expectations. That most recently happened this past May, and in 2022 before that, but as of December, things have shifted the opposite direction.  The spread between current and future categories is now at the widest level since January. Compared to one month ago, that spread fell 0.93 standard deviations, which ranks in the first percentile of all monthly moves over the survey’s history. That means it was a historic month for shifts of positive expectations and negative current conditions.

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