30-06-2025
Trump trade whiplash sends investors abroad
While bulls are cheering the stock market record, it's flimsy compared with gains in the rest of the world.
Why it matters: President Trump's flip-flop on trade with Canada last Friday is the type of policy volatility foundational to the Sell America trade, which is still driving gains in markets outside of the U.S
Strategists see more room to run in the shift to international stocks.
By the numbers: Take a look at the performance of some foreign indices year to date.
The German DAX is up 20%. The Chinese Hang Seng Index is up 24%.
Even Canadian stocks are mildly outpacing U.S. gains, up nearly 7% this year compared to the 5% gain in the S&P 500.
What they're saying: A rotation out of the U.S. into the rest of the world, particularly to Europe and individual countries offering stimulative economic policies, is the consensus for the second half of this year.
"The U.S. itself no longer the safe haven that it was in the past 20 years," says Jay Pelosky of TPW Advisors.
It's not just that the U.S. is fading. The "aggressive fiscal stimulus" adopted by the rest of the world is set to drive further earnings growth elsewhere, he says.
Yes, but: Thanks to big tech, most banks have maintained an overweight rating on both U.S. and European stocks through year end.
About half of the gains in the S&P are driven by large-cap tech names.
You don't have to believe in the entire U.S. to own the S&P. You may just have to believe in the tech trade. That trade is expected to be buoyed by continued earnings growth, cushioned by declines in the U.S. dollar.
