Opinions vary on whether mercurial US trade policy and a de facto abrogation of America’s hegemonic responsibilities will ultimately catalyze an exodus from US financial assets.

The was no evidence of a so-called “buyer’s strike” in the latest TIC update, although China did slip to third on the list of largest foreign Treasury holders.

I tend to think this situation’s pretty binary: Either Donald Trump’s going to trigger capital flight or he isn’t. Either we’re witnessing the end of the world as we’ve known it for the past seven decades or we aren’t.

Again, good people (and bad ones) can disagree on all of that, but there does seem to be an emerging consensus that US equities aren’t likely to be the best-performing asset class in the near- or even the medium-term.

Maybe that’s a contrarian indicator. After all, US stocks were the overwhelming favorite to outperform in 2025 according both to people who’re supposed to know what they’re doing and those who aren’t. Look how that turned out.

BofA’s Michael Hartnett, to his credit, was skeptical that US equity exceptionalism would continue in the new year. Indeed, it’s fair to say he predicted the blast of RoW outperformance which defined the first several months of 2025. Now, he suspects the next bull market’s in EM shares.

An environment where the dollar’s weak, US bond yields have topped and the Chinese economy recovers is fertile ground for emerging market equities, Hartnett wrote, in this latest. As the figure on the left, below, shows, EM shares excluding Chinese stocks have traded in a range for nearly two decades. Hartnett suspects they’re prime for a break out.

But what about the Magnificent 7? Isn’t there an argument to be made that US shares will remain in demand versus their global peers simply because the vaunted septet have a figurative and literal monopoly on cutting edge tech (DeepSeek moments notwithstanding)? In other words: Isn’t “peers” still a misnomer when we’re comparing international stocks to the S&P 500 considering the extent to which the index is dominated by the tech mega-caps?

Good questions, all. The figure on the right plots Magnificent 7 outperformance versus the S&P with the Nifty Fifty’s relative performance versus the benchmark in the 60s and 70s. Frankly, I don’t care for historical “analogue” charts like that one. A Bloomie and a double y-axis is a dangerous combination. But caveats aside, that comparison probably does have some merit, particularly if you think the late-60s and 70s is a useful lens through which to analyze the current politico-macro environment.

“Despite great tech advances, the macro and markets in the early 70s were all ‘boom & bust,’ ‘stop & go,’ with big (geo)political policy events triggering multiple inflection points for Fed rates, stock prices and bond yields in wide trading ranges,” Hartnett wrote, in the same note, adding that then, as now, “a bunch of US blue-chip, large-cap, high-growth companies outperformed other assets meaningfully” in a “volatile environment.”

His point, I think, was that Mag7 outperformance versus the rest of the US equity market can at least hold up. The analogue, as presented anyway, appears to suggest that trade’s more or less exhausted, though, even if it doesn’t point to material underperformance any time soon.

Whatever the case, the burgeoning consensus seems to be that even if there’s no exodus from US assets, “peak US exceptionalism” has come and gone, both in markets and, quite possibly, in a lot of other respects too.