Paradigm shift?

2025 is quickly becoming a year to remember. Not only because of tariffs and trade, but also because for the first time in years the U.S. is meaningfully underperforming the rest of the world. In fact, using YTD terms, the U.S. is trailing the rest of the world by the widest gap since 1993. That’s 32 years and we’re only in May. Does this mean the U.S. has lost its mojo? Or is it simply a valuation matter? At this point it would look like it’s the latter, and once the valuation gap closes, money will return to the U.S. looking for good returns and liquidity. But the clouds of the debt and deficit are very much present. Can an escalation in the Ukraine conflict push flows back into the US looking for safety rather than returns? The S&P500 is back in the green, and the Dow and Nasdaq should follow. Is this a transition year or a new paradigm shift?

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