When domestic market trends are uncertain, international bank stocks are solid investment options because they enable investors to ride favorable macroeconomic trends in their home economies. They also help diversify one’s portfolio and mitigate overall portfolio risk.
The U.S. economy is currently facing a number of headwinds, including high inflation, supply chain issues, and an increasing number of COVID-19 omicron cases. Although the Fed has announced measures such as reducing its bond purchases and increasing benchmark interest rates three times this year to control inflation, the economy is expected to struggle with a severe supply-demand imbalance in the labor market and soaring real estate prices. Goldman Sachs Group, Inc.’s (GS) chief economist Jan Hatzius said, “I would say growth is clearly slowing. Obviously, we are past the peak rate, but it’s a relatively gradual slowdown.” Goldman has cut its 2022 GDP growth projection for the U.S. economy to 4% from 4.4% previously.
