The U.S. Equity market keeps pushing new highs. So far this year, the S&P500 has achieve all time highs 29 times, despite inflation and what is perceived as hugh interest rates. Over the last 16 years, the index has returned an impressive 457% compared with 96% for the rest of the world and 48.3% for EM. Looking ahead, if AI is going to be the determinant factor of future returns, the gap between the U.S. and the RoW may widen even more. Only if reality catches up to (wild) expectations, we could see a rotation out of the U.S. where valuations are elevated, particularly when compared to EM equities which are screaming cheap. But it’s not clear what wil be the trigger, and at the moment, it seems the big question is “if” not “when” would it happen.
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