With both global equities, and US stocks trading at or just shy of all time highs, the prevailing consensus is that 2017 has been a good year for stock investors. Well, maybe not, especially not to EUR-denominated European investors, for whom the total return in the S&P is the lowest of all regional markets.

As SocGen's Andrew Lapthorne writes this morning, Emerging market equities typically struggle in the face of a rapidly rising dollar and so conversely have benefited as this year’s consensus view for US dollar weakens, along with evaporating expectations of a rise in US interest rates. The flip-side has been a strong Yen and a weaker Japanese equity market. The chart below plots MSCI Japan to EM both in US dollar terms versus changes in the US DXY dollar index over three months. Notably this relationship has eased since May, indicating that perhaps cyclical risk is now becoming more important.

Meanwhile, the SocGen strategist notes that in total euro return terms, the US has been the weakest equity market so far this year (even though as we observed this morning, in substantially weakened USD terms, the MSCI US index is at all time highs), with Emerging Markets and the Eurozone the strongest.

In fact, as Lapthorne points out, the Eurozone's resilience in the face of a much stronger euro is perhaps surprising, however after a long hiatus profit growth has finally returned to the region.

Then again, this resilience is also likely to come under increasing scrutiny in the months ahead as easy comparables with 2016 drop out; it is already clear that Eurozone stocks with US dollar earnings have been struggling in recent months, whilst Utilities and Transport have been the main gainers. As yet EPS expectations appear to be holding up, but currency provides a great way out for corporates and analysts alike looking for an excuse to cut. In short, when looking at stock returns, the USD-denominated picture covers up the raging FX volatility - and dollar weakness- below the surface...