Core Insights - The research investigates systematic tactical allocation to international equity mandates, focusing on Emerging Markets (EM) and Europe, Australasia, and the Far East (EAFE), in light of macroeconomic regime transitions and challenges to USD hegemony [1][2][38] - A dynamic model is developed to generate actionable allocation signals, moving beyond traditional mean-variance optimization by incorporating momentum variables [2][5] Methodology - The study employs a long-horizon dataset from 1969 to 2025, capturing multiple macroeconomic and currency regimes, allowing for a robust analysis of structural breaks and regime-dependent factor efficacy [4][9] - A dollar-neutral spread between EAFE and US equity markets is constructed to analyze performance characteristics and forecast trends using regime-sensitive technical and macroeconomic signals [11][12] Empirical Results - The performance of the spread momentum strategy shows strong regime-dependent efficacy, with optimal lookback periods identified as 12-24 months for capturing trends while minimizing noise [22][35] - The study finds that the strategy's alpha is primarily generated by maintaining long positions in US equities and short positions in EAFE during bull markets, while also capturing reversals in earlier decades [22][38] Strategy Development - Two strategies are proposed: Strategy A focuses on pure spread momentum based on the spread's price history, while Strategy B utilizes a simple moving average to condition trading positions [13][25] - Both strategies demonstrate significant positive payoffs, with the optimal implementation involving intermediate-term signals to mitigate whipsaws during volatile periods [39][40] Future Research Directions - Future studies may explore integrating volatility-adjustment mechanisms, developing proxies for Emerging Markets, and decomposing signals' alpha into various economic components to refine the underlying hypotheses [40][41]