Weekly Update: Sell America. Buy Brazil
Good evening, and welcome to this week’s edition of Stealth Trades!
What if the US was not the best stock market to invest in?
What if another country had more natural resources, large energy production, and the stocks were selling for half off?
I’m talking about Brazil. And before you delete this email, hear me out…
The US stock market hasn’t been a lot of fun the last few weeks. The Iran war, stubborn inflation, and soaring energy costs have wreaked havoc on everything.
With the exception of crude oil, everything in the market is down – metals, commodities, stocks in every sector.
This made me take a deep dive – to look and see if there is a better value out there for investors.
And I believe there is.
Because the macroeconomic backdrop in the United States? Let’s just say it’s been better…
We just started a war.
The Executive branch (Trump) is attacking Central Bank independence (Powell/Fed).
Budget deficits are running at $2.5 TRILLION per year (and that’s with a good economy.)
We have judicial interference with monetary policy (tariffs).
And our largest, most profitable companies are burning cash at record rates.
These are EMERGING MARKET characteristics, and yet the US equity market still carries a premium developed market valuation.
In other words, our stocks trade for higher multiples of sales, earnings and cash than stocks in countries like Brazil, Poland and Spain.
But that premium is evaporating…
The S&P 500 returned 17% in 2025. Emerging markets returned double that at 33%.
And in 2026, that trend is likely to accelerate.
This is hard for some investors to grasp. Because for the last 17 years, the US has dominated.
Our stock market has experienced a historic rally since 2009.
But this has not always been the case.
In the 1990s, emerging market equities massively outperformed US stocks.
This was the case in the early 2000s as well.
It is only since 2009 that the Nasdaq and S&P 500 have outpaced foreign markets.
And I expect to see this trend reverse in the coming years.
Look at the valuations…
As of last year, the US market trades at roughly 22 times earnings.
But the rest of the world trades at a 14X multiple.
Emerging markets are at 12.
And the Brazilian stock market has a P/E ratio of just 8!
Brazil, to me, offers one of the most attractive global investment opportunities today.
On top of a bargain valuation, you get a country rich in natural resources – petroleum, natural gas, gold, iron ore. Not to mention their agricultural exports like soybeans and coffee.
If you’ve been reading my newsletter for a while, you know how bullish I am on commodities with this inflationary backdrop. And Brazil is dripping in them.
The cherry on top?
Brazil is in the early stages of a rate-cutting cycle.
Interest rates in Brazil are 14.75% (you thought your 6.5% mortgage was bad).
But Brazil’s central bank just started cutting.
And these cuts could be 5-10%… not the fractions of a percent we are hoping for here.
Interest rate cuts are one of the biggest drivers for stock prices. Cheap money is what fueled most of the bull markets here for the last twenty years.
And it will be no different for our friends to the south.
Do with this information what you will.
Personally, I sold my Vanguard S&P 500 ETF (VOO) and put those dollars into the iShares MSCI Brazil ETF (EWZ).
This is not a bet against America.
And I am not expecting a market crash.
I am simply allocating to where I see the most value for my investment dollars.
Best wishes for your trading,
