UBS: The US dollar faces asymmetric structural downside risks

In the past quarter, the boost to U.S. corporate earnings from a weaker dollar has been "far below normal levels." The buyback yield of U.S. stocks is currently only on par with global peers and lower than that of the UK, which impacts capital flows, corporate earnings, and valuations. Strategists noted that communications with clients indicate "a clear shift of funds toward global markets, and ETF fund flows also confirm this." 45% of recent fund flows have gone to equity markets outside the United States. UBS stated that it has not yet underweighted U.S. stocks, "but the risk of underperformance appears higher than the likelihood of outperformance."