Latest news with #EWZ
CNBC
11-07-2025
- Business
- CNBC
The S&P 500 is starting to close its 2025 gap to foreign stocks as Trump leans in to tariff fights
The Trump administration's moves to ratchet up trade tensions has done little to knock U.S. stocks off their recent highs, but investors with broader portfolios might suddenly be feeling pinched. Ulrike Hoffmann-Burchardi, chief investment officer for the Americas and global head of equities at UBS Global Wealth Management, said in a note to clients that Trump appears "emboldened to escalate trade actions" after some recent policy wins. The strength of the stock market may be emboldening the White House in its trade talks. Trump, in a phone call with NBC News' "Meet the Press" moderator Kristen Welker, said the record stock market highs were evidence that tariffs have been " very well-received ." Domestic stocks that are rising despite tariff concerns may simply reflect that goods-based tariffs aren't necessarily a major negative to the tech-heavy U.S. stock market. "Many of the most heavily weighted U.S. equities in the S & P 500 are fairly insulated from tariff risk, in our view, and we think the index can climb to 6,500 by June next year despite periodic volatility," Hoffmann-Burchardi said. That's about 4% above where the index was trading Friday. Of course, many investors hold more than just large cap domestic stocks. One key trend to watch may be whether foreign markets show the same resilience as U.S. stocks recently have. In the first half of the year, global stocks outperformed the U.S. — an unusual reversal of long-term American dominance. But there are some signs that may be starting to flip back now in the direction of the U.S. Major Vanguard ETFs tracking Europe, emerging markets and world markets excluding the U.S. are all underperforming the S & P 500 in July after outperforming through the first half. And some country-specific funds whose nations are are in the crosshairs of new White House tariffs are doing even worse. The iShares MSCI Brazil ETF (EWZ) is still outperforming the U.S. in 2025, but is down nearly 5% in July after Trump slapped 50% levies on the South American country this week. The iShares MSCI Canada ETF (EWC) is also trailing this month. EWZ YTD mountain This Brazil fund has struggled in July after a strong first half. If this latest reversal against international and in favor of domestic doesn't hold, valuations may be one reason. Peter Oppenheimer, chief global equity strategist of Goldman Sachs International, said in a note to clients that U.S. stocks still look expensive compared to rest of the world, even with the first half underperformance. "After a decade of U.S.-led dominance, the case for diversification is back. Valuation spreads between the U.S. and the rest of the world are at historical highs," Oppenheimer said. — CNBC's Michael Bloom contributed reporting.
CNBC
10-07-2025
- Business
- CNBC
Trump's latest tariff shock just hit one of the best-performing stock markets in the world
Brazil is among the latest countries that received a letter from President Donald Trump threatening higher tariffs, putting pressure on one of the top-performing markets in the world. Trump said in his letter the U.S. will impose a 50% tariff on Brazilian imports, partly in retaliation for the country prosecuting former Brazilian President Jair Bolsonaro for what authorities say was a coup attempt. Brazil's current leader, Luiz Inacio Lula da Silva, said it will retaliate against the U.S. with similar duties. The escalation in trade tensions with Latin America's largest economy comes as Brazil's stock market enjoys a strong year. The Bovespa index is up 14% in 2025, far outpacing the S & P 500's 6% advance. The iShares MSCI Brazil (EWZ) exchange-trade fund has popped 25% in that time. But EWZ lost more than 2% premarket Thursday after Trump's announcement. Brazilian oil giant Petrobras also lost 2% before the market opened. EWZ 5D mountain EWZ 5-day chart "If the 50% tariff rate remained in place, it would present a negative shock to the Brazilian economy, but one that would be modest in size," UBS said in a note. "However, the U.S.'s 50% tariff would impact more strongly certain products, such as semi-manufactured iron and steel (72.5% of exports are destined for the U.S.), aircraft (63.2%), construction materials (57.5%), ethanol (48.5%) and wood and related products (43.2%)." Bank of America strategist David Becker also thinks the impact on Brazil stocks could be limited. "U.S. tariffs on Brazil have a limited direct impact on the Ibovespa [stock index]: we estimate that only 1% of Ibov revenues come from exports from Brazil to the U.S.," Becker said. Bottom line: Trump's latest tariff shock targeting Brazil could be a buying opportunity for those looking for exposure to one of this year's best-performing markets. Elsewhere Thursday on Wall Street, Goldman Sachs upgraded McDonald's to buy for neutral after the fast food chain underperformed the wider market so far in 2025. "We believe MCD ultimately has the scale/marketing/digital advantage to successfully navigate through this environment. Management has firmly committed to market share gains through product and marketing innovation (including return of snack wraps, addition of daily double burger to the McValue platform in the U.S.), and we think this could drive a reversal to positive comp trends," Goldman analyst Christine Cho said.
CNBC
12-06-2025
- Business
- CNBC
The political tide in Brazil is changing again. How to trade it
Luiz Inácio Lula da Silva's influence in Brazil has shown signs of weakening recently, as indicated by polling data, political challenges, and public sentiment. A May 2025 AtlasIntel survey reported his disapproval rate at 53.7%, the highest in his current term, while a June 2025 Quaest poll pegged disapproval at 57%, a record low for his presidency. These figures reflect growing dissatisfaction, even among traditional supporters, such as women, young people, and low-income groups. Despite economic growth exceeding IMF forecasts, Lula's fiscal policies have sparked concern. His administration's focus on revenue increases without significant spending cuts led to a budgetary credibility crisis by mid-2024, with the Brazilian real hitting record lows against the dollar. The failure to pass key revenue-generating measures, like corporate tax credit limits, and the reliance on social spending. Lula's foreign policy stances (e.g., ties with Venezuela, comments on Israel) and perceived missteps, like blaming the central bank for high interest rates, have fueled criticism. Social media reflects growing frustration, with posts calling Lula "outdated" and noting public booing. Meanwhile, Jair Bolsonaro's far-right base remains active online, amplifying opposition. Bolsonaro, meanwhile, took the stand on Tuesday, June 10th, in a trial at Brazil's Supreme Court, where he and seven associates are being tried on allegations of a coup plot after losing the 2022 election to Lula. This came after an earlier corruption conviction against Lula was annulled in 2021, allowing him to run. Brazilian politics is certainly a colorful affair. Positive for stock market? A shift to the right in Brazilian politics could be positive for the stock market, particularly the Bovespa index . Still, the outcome depends on the nature of the change and the specific policies implemented. In 2018, when Lula's corruption conviction was initially upheld, barring him from the presidential race, the Bovespa surged to a record high above 83,000 points. Investors viewed this as reducing the likelihood of a left-wing, anti-austerity government, which would favor market-friendly policies. By contrast, Lula's 2022 victory led to a dip in Brazilian assets. Since the beginning of Lula's third term in January 2023, iShares MSCI Brazil ETF (EWZ) has underperformed S & P 500 by 46.5%. However, as Lula's popularity has dropped, EWZ has surged, up more than 25% year-to-date, significantly outperforming the S & P 500. EWZ YTD mountain iShares MSCI Brazil ETF YTD Even after accounting for this outperformance, Brazilian equities appear relatively inexpensive, trading at just 8.5 times forward earnings compared to 23.5 times forward earnings for the S & P 500. Lula's leftist principles don't align very well with many of the populists and anti-globalists who have been gaining traction recently, and he has been critical of President Trump compared to Mexico's President, Claudia Sheinbaum, who has taken a more diplomatic approach. Incidentally, EWW, the MSCI Mexico ETF, has performed even better than EWZ. The trade Suppose one is inclined to believe that the Brazilian president will need to move further to the right to maintain power, or may be replaced with a more business-friendly President, thus propelling Brazilian equities further. In that case, purchasing EWZ calls, such as the slightly in-the-money August $28 strike calls for approximately $1.00. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
