The enthusiasm and euphoria that greeted the Trump election win, especially among the retail investor base, has been replaced by retail sentiment at levels last seen at the bottom of the 2022 bear market.

Additionally, rotation is the lifeblood of bull markets and today, the rotation is global –  from the US to the rest. ETFs like the iShares MSCI Emerging Markets ETF (EEM) are benefitting, advises Jay Pelosky, founder and principal at TPW Advisory.

The enthusiasm and euphoria that greeted the Trump election win, especially among the retail investor base, has been replaced by retail sentiment at levels last seen at the bottom of the 2022 bear market. Additionally, rotation is the lifeblood of bull markets and today, the rotation is global – from the US to the rest. ETFs like the iShares MSCI Emerging Markets ETF (EEM) are benefitting, advises Jay Pelosky, founder and principal at TPW Advisory.

Crypto – THE Trump trade (we thought so, too) – has fallen like a stone alongside many growth and hype stocks and segments. Remember the Trump coin? The Melania coin? Down 90%.

Stock market weakness has been concentrated in the Mag 7, which took a shot to the heart with the advent of Deep Seek, something we have discussed at length. The shift out of Mag 7 and into China tech funds like the KraneShares CSI China Internet ETF (KWEB), has been one of the fastest, cleanest, and clearest examples of rotation we have ever seen.

Then there is the strong relative performance of the non-US equity markets over the past two weeks, with the iShares MSCI EAFE ETF (EFA) and EEM holding above their 200-day moving averages while the S&P, QQQs, and others broke well below. That is a testimony to the global equity rotation under way. Rotation is the lifeblood of bull markets and here the rotation is global, from the US to the rest.

We continue to strongly favor non-US equity and remain overweight both Europe and Asia. Our focus is on large caps, banks (loan growth, fewer defaults, more M&A), and defense in Europe, and a Japanese focus in Asia.

We also remain overweight EM equity with a strong focus on China, both large cap and tech. We have held these positions for some time in our Global Multi Asset (GMA) model, except for EU defense which we added last month. We would use rips in US equity to reduce positions and employ dips in non-US as opportunities to add.

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