EWW Overview

Market Reaction: Following the assassination of notorious drug lord El Mencho, the iShares Mexico exchange-traded fund dropped by 1% and the peso remained stable in the initial trading days.

Significance of El Mencho's Death: El Mencho, the leader of the Jalisco New Generation Cartel, was killed in a violent confrontation, marking a significant event in Mexico's ongoing battle against drug cartels.

Emerging Strength: South American equities are showing significant strength beneath the surface.

Global Market Performance: The region is becoming a standout performer in the global market landscape.

U.S. Market Performance: The S&P 500 has gained 15% year-to-date, primarily driven by large-cap technology stocks, but U.S. equities have underperformed compared to several international markets.

International Market Gains: Countries like South Korea and Peru have seen equity returns exceeding 80%, with strong performances in Southern Europe and resource-rich economies due to rising commodity prices and improved growth expectations.

Investment Outlook: J.P. Morgan Asset Management suggests that investors should diversify away from U.S. tech stocks, as future global equity performance may favor markets with strong earnings growth and attractive valuations.

Regional Diversification Benefits: The report emphasizes that diversifying investments can mitigate risk and enhance returns, particularly if enthusiasm for U.S. artificial intelligence themes diminishes.

Tariff Proposal: Mexico's Congress is set to vote on President Claudia Sheinbaum's proposal to impose tariffs of up to 50% on Chinese imports to protect domestic manufacturers and ease trade tensions with the U.S.

Impact on U.S. Relations: The proposed tariffs may pave the way for tariff relief from the U.S. on Mexican steel and aluminum, indicating a potential shift in trade dynamics between the two countries.

Legislative Timeline: The bill is currently being debated by a lower-house commission, with plans for a vote in both the House and Senate before Congress's year-end recess on December 15.

Broader Trade Context: The move comes amid ongoing discussions about steel tariffs in the EU and their implications for various industries, including automotive manufacturing.