If thereās one word to describe the Trump administration over the past month, itās ābackfire.ā
Just this past week, weāve seen Australia ($EWA) and Canada ($EWC) rally following their respective electionsāboth countries opting for left-of-center governments in a clear rebuke of Trump-style politics. Their conservative leaders, caught mimicking Trumpās aggressive rhetoric amid a looming global trade war, were swiftly voted out.
Meanwhile, in a move that further underscores the unintended consequences, China ($FXI) has been quietly outperforming the United States ($SPY), even as tensions rise.
Talk about a backfire.
Since 2024, $FXI has been steadily trending higher relative to $SPY, and thereās no sign of that trend reversing anytime soon.
Strip away the politics, and the rotation out of U.S. equities starts to make perfect sense.
Valuations may not matterāuntil they suddenly do. U.S. stocks are commanding a premium that investors seem increasingly unwilling to pay in this environment. On the other hand, China offers both attractive valuations and strong momentumāa high-conviction setup for capital looking abroad.
