Multi-Asset Positioning in a Trump 2.0 Policy Regime

The US stock market has significantly outperformed international counterparts, with the S&P 500 surpassing the MSCI EAFE Index by 40% between January 2021 and February 2025. This trend is expected to continue, as US economic outperformance is likely to sustain superior corporate earnings growth, with S&P 500 earnings projected to grow by 12.1% in 2025 compared to 8.6% for the Stoxx Europe 600 Index. Despite this, European equities present opportunities due to their low valuations, although geopolitical uncertainties and a lack of a robust tech sector pose risks to their sustained outperformance.

Emerging markets exhibit potential, yet face challenges from a strong US dollar, uncertainties related to China, and increasing US protectionism. The US equities market, while offering strong growth potential, requires careful selection due to high valuations and market concentration. The dominance of the "Magnificent Seven" stocks, fueled by AI optimism and superior earnings, is expected to diminish as earnings growth becomes more evenly distributed across the market. Overall, a strategic focus on US equities, with attention to valuation and diversification, appears prudent for optimizing investment outcomes in the current economic climate.