Every so often, we hear the narrative that underperformance from China's stock market is a canary in the coal mine for U.S. equities, and the recent tariff🧜 tantrums have brought this discussion front and center. Today, I want to look at this relationship to see if it has any merit or if it's just a smart sounding soundbite that you c♔an use around the office water cooler.

Below is a nearly 40-year weekly line chart of the 澳洲幸运5官方开奖结果体彩网:Shanghai Composite relative to the 澳洲幸运5官方开奖结果体彩网:S&P 500. Typically, the version of this chart accompanying the tariff talks is a year-to-date chart of the Shanghai Composite's performance falling off a cliff relative to the S&P 500. When it's framed that way, it's very easy to create the illusion of a relationship between China's underperformance and the 澳洲幸运5官方开奖结果体彩网:volatility we experienced in the U.S. stock market.

What expanding the timeframe of this chart does is show that this year's weakness is nothing more than an acceleration of a trend that's been in place for nearly a decade. China's performance relative to the U.S. ebbs and flows, but at the end of the day, it's really just in one giant range. As the 澳洲幸运5官方开奖结果体彩网:correlation study at the bottom of the chart indicates, there's nothing that suggests the Shanghai Composite needs to be outperforming the S&P 500 for U.S. stocks to move higher on an absolute basis. (For more, see: The Best ETFs for the Shanghai Composite Index.)

With the constant noise created by the markets, it's tempting to draw conne💃ctions between two seemingly related events, but since we're market participants and not journalists, it's important to make su🔯re that the data supports your conclusion before publishing or acting on it.

Anyone who thinks Chinese stocks underperforming U.S. stocks is a new development clearly hasn't been paying attention. If you're going to be bearish U.S. equities, you'll need to find a better reason than China.

If you enjoyed this post and want access to more of our international equity and intermarket research, consider joining the All Star Charts community by starting a  or signing up for our .

Thanks for reading, and  if you have any questions!