Equities have returned to record highs, but performance during the fall from grace earlier this year and the subsequent rebound off the April lows has not exactly been even. With tariff headlines being one of the main focuses of the market this year, performance has been sensitive to how exposed a given stock is to international trade. One proxy for this international exposure is the percentage of revenues that a company generates inside versus outside of the US.  As shown below, from the election last November through Liberation Day when President Trump first announced reciprocal tariff rates, the best-performing cohort of Russell 1,000 members was those that do not generate any revenues outside of US borders (about 27% of member stocks in the index). That group averaged a 1.36% gain over that span compared to an average loss of 6.24% for the stocks that generate over half of their revenues outside the US (a little less than 20% of member stocks) or a more modest 2.65% average loss for all stocks in the index.  Obviously, with the index trading at fresh records, stocks have amazingly been in rally mode in the wake of Liberation Day, with the average Russell 1,000 now sitting on a 4.6% gain in that span. Those internationals that had formerly been hit the hardest have since shifted to the best performers, averaging a 6.28% gain.

Breaking the Russell 1,000 into deciles (equal-sized groups ranked by their share of revenues generated internationally from low to high) is another way of telling the story. As shown in the first chart below, from Election Day through Liberation Day, the only decile to average a gain was comprised of the stocks with zero international revenue exposure. Conversely, decile 10 of the most heavily exposed dropped 8.16% on average, the worst of any decile. That trend of outperformance of domestics with underperformance of internationals has been turned on its head in the past couple of months as decile 10 is now the best performing group since Liberation Day..

Using data from our International Revenues Database, a little over a quarter of the Russell 1,000 generates all of their revenues domestically (or in North America).  That reading has been mostly flat in the past few years and is also down versus the high 30% range in the late 2000s.  By comparison, the share of stocks that rely on international sales for a majority of their revenues is a little less than 20% which is right inline with the typical reading observed for most of the past decade.

Of course, the type of business a company is involved in is a major determinant of international revenue exposure. For example, Utilities are, in a sense, natural monopolies as well as heavily regulated. Logically, that makes it hard for these companies to break into new markets, especially outside the US. As such, nearly all of that sector's revenues are generated within US borders, whereas an area like Tech is the polar opposite.  Easier trade restrictions and largely frictionless supply chains for things like software mean that the Tech sector sees almost half of its revenues come from outside the US.

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