They were (still) buying US stocks over the last week.

On the heels of an enormous, $56 billion post-election inflow, US-focused equity ETFs and mutual funds took in another $16 billion, the latest EPFR update showed.

It was the seventh consecutive inflow and the ninth in 10. As the figure below shows, it’s been a helluva run.

For 2024 as a whole, US equity funds have now seen $405 billion of inflows.

This is the “US exceptionalism” trade and it’s also a “TINA” play. What else are you going to buy if not US shares? The “everything China” trade pushed by hedge funds early last month turned out to be a pump and dump — folks talking their books while playing the stimulus bounce. Imagine that, right? Europe hasn’t been cool since The Renaissance. And so on.

There’s more to this than the allure of the Mag7. “Higher neutral rates cause persistent capital flows into the US and push the dollar higher,” SocGen’s Kit Juckes wrote this week. “And since changes in neutral rates reflect long-term changes in economies, this isn’t a short-term phenomenon.”

Note that the dollar was headed for an eighth consecutive weekly gain.

As Jucke’s colleague Albert Edwards put it, “given the undeniable economic problems in Europe, investors are flocking to the US, convinced ‘There Is No Alternative’ — TINA.”

BofA’s Michael Hartnett weighed in. “In 2024, liquidity poured into high quality assets like IG bonds and companies with strong monopolistic market positions, particularly those in US driving and benefiting from the AI arms race,” he wrote.

That’s led to very stretched multiples and extreme valuation disparities, though. Note from the figure on the right, below, that the S&P trades at 26.5 times trailing earnings, which Hartnett noted is “the fourth-highest in the past 125 years,”

The figure on the left, while stark, probably isn’t the best way to illustrate the US exceptionalism trade. Chinese tech’s laboring under the thumb of a dictator, and US tech’s buoyed by a once-in-a-generation rally for Nvidia. So, that comparison’s apples to oranges.

While not all divergences are as mind-bending as that illustrated on the left, above, the “US over everything” trade’s apparent pretty much everywhere you look. As Hartnett went on to note, the US is trading at “75-year highs versus the rest of the world.”

If you ask him, the US exceptionalism theme might’ve peaked, at least cyclically. Allocations to international stocks could bottom in Q1, he suggested, as US financial conditions tighten into a stronger dollar, elevated rates and a Fed that’s perhaps more cautious to keep cutting than its global counterparts, some of whom may be in full-on easing mode in 2025.