In one of the sections from last Friday’s Bespoke Report newsletter (available to Bespoke’s premium research clients), we featured the chart below looking at the performance of “Internationals” versus “Domestics” since the US Presidential Election last November.
What do we mean by “Internationals” and “Domestics”? The “Internationals” are the stocks in the S&P 500 that generate 50%+ of their revenues outside of the US. The “Domestics” are the stocks in the S&P 500 that generate 90%+ of their revenues domestically.
President Trump campaigned on an “America First” directive when it came to his economic policy proposals. And in the first couple of months following his victory, the S&P 500 stocks with the heaviest domestic exposure outperformed significantly. But since the start of 2017, we’ve seen the “Domestics” trend sideways while the “Internationals” have been the stocks outperforming. The rush into the “Internationals” so far this year has pushed the basket well ahead of the “Domestics” since last November’s Election.
The shift in outperformance from “Domestic” stocks to “Internationals” has tracked the performance of the US Dollar almost perfectly. The Dollar also rallied in the initial months following Trump’s November victory, but it has been trending lower and lower since the start of 2017. When the Dollar is declining, it benefits companies with heavy international revenue exposure. All you have to watch is the direction of the Dollar going forward if you want to know whether the “Domestics” or the “Internationals” are outperforming.
If you want to find stocks that generate a heavy percentage of their revenues either inside or outside of the US, look no further than our International Revenues Database (available to both Bespoke Premium and Bespoke Institutional members). If you’re not a Bespoke Premium or Bespoke Institutional member but would like to try out the database, start a two-week free trial to Bespoke Institutional today.