Parochialism runs deep in U.S.-based news media, reflecting the isolationist impulse that’s ingrained in American society. Unless there’s a far-flung crisis, the rest of the world barely gets covered on the nightly newscasts in our country.

If you don’t believe me, try an experiment tonight. Watch a few minutes of U.S. network news, then toggle over to, say, the BBC. The contrast is astonishing, if not dispiriting.

But the fact is, we live in an interconnected Global Village. For today’s column, I’m emphasizing global macroeconomic trends and how to profitably leverage them.

The three major U.S. stock market indices jumped higher Wednesday, after Federal Reserve Chief Jerome Powell indicated that economic growth is likely to be strong this year but the Fed would nevertheless stand pat on rates. The Dow Jones Industrial Average rose 189.42 points (+0.58%), to close above 33,000 for the first time. The S&P 500 rose 11.41 points (+0.29 %). Both the Dow and S&P 500 closed at record highs. The tech-heavy NASDAQ climbed 53.63 points (+0.40%).

European stocks closed lower Wednesday amid disappointing economic projections for the region. Asia-Pacific markets were mixed. In pre-market futures contracts Thursday, the major U.S. indices were trading mostly lower.

The big picture…

The International Monetary Fund (IMF) estimates that the global economy’s gross domestic product (GDP) contracted by 4.4% in 2020, the worst decline since the Great Depression of the 1930s. The only major economy to grow in 2020 was China, which posted GDP growth of 2.3%. Global GDP is expected to grow 4.1% in 2021.

Europe has been hit hard by the pandemic. According to research firm FactSet, the aggregate GDP of the eurozone economy contracted by 0.7% in the fourth quarter of 2020 compared with the previous quarter, as countries reimposed lockdowns to combat the second wave of the coronavirus (see chart).

The eurozone is the economic region formed by those member countries of the European Union that have adopted the euro as their common currency. The eurozone’s GDP decline in Q4 was driven by significant contractions in France (-1.4%) and Italy (-1.9%), whereas Germany and Spain experienced modest growth. Germany is the growth engine of Europe and its mighty manufacturing base is stirring again. For full-year 2020, the eurozone’s economy contracted by 6.8%.

Economic weakness in Europe is projected to persist through the first quarter of 2021, with analysts surveyed by FactSet expecting a 1.1% decline in GDP for the eurozone in the quarter. However, the eurozone’s economy is expected to surge over the next three quarters, with annual growth projected to reach 4.3% in 2021 and 3.9% in 2022.

Britain, which is grappling with the messy aftermath of Brexit, is expected to post an economic contraction of 1.5% in the first quarter of 2021. That would put the UK economy, by the end of Q1, at 11% below its pre-COVID level.

Read This Story: London Calling: Four Ways to Profit from Brexit

The good news is that economic growth in both the U.S. and China, the world’s largest and second-largest economies, respectively, is expected to reach between 7% and 8% this year. For the U.S., fourth-quarter GDP came in at 4.1%. China’s Q4 growth rate exceeded consensus expectations, expanding at a blistering year-over-year rate of 6.5%.

As the global economy picks up steam and China leads the way, the wider Asian region is home to inherently strong growth stocks that are value plays. We’re in the midst of a market rotation, whereby the leaders and laggards are switching places. Beaten-down stocks in cyclical sectors are coming into vogue.

You should emphasize economically sensitive equities, in such sectors as energy and financials, and pare your exposure to momentum stocks that have enjoyed a prolonged rise (e.g., in the technology sector). Also, make sure you’re sufficiently diversified not just among asset classes but also geographical regions. Asia, which achieved early containment of the pandemic, is particularly appealing right now.

After languishing for most of 2020, global bank stocks have been rebounding over the last few weeks, as economic optimism grows. Banks based on the European Continent are reaping an advantage from Brexit, because they’re grabbing market share from London’s once-dominant financial industry. The re-imposition of higher fees and red tape on traders doing business via London is prompting them to flee to other financial capitals, notably Paris.

Britain is struggling with a double-whammy: the loss of EU trading privileges because of its exit from the trading bloc, combined with the emergence of a more contagious variant of the coronavirus that’s causing new lockdowns in the country. Britain’s misfortunes make global multinationals based in Europe more attractive to investors. Purveyors of consumer staples and discretionary goods with headquarters on the European mainland are smart bets.

Editor’s Note: Perhaps geopolitical turmoil makes you nervous and you’re looking to reduce risk. The good news is, there’s an investing methodology that’s immune to the dire headlines.

This trading system was devised by my colleague Jim Fink, the chief investment strategist of Velocity Trader, Options For Income, and Jim Fink’s Inner Circle.

By using Jim’s proprietary trading system, you can make steady profits regardless of economic ups and downs, or even the course of the coronavirus. To learn Jim’s wealth-building secrets, click here.

John Persinos is the editorial director of Investing Daily. You can reach John at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.