Trump's America Is Losing The Crown: A New Market Order Is Rising

An expression of American market dominance that defined the past decade is quietly fading, and Bank of America says a new world order could reshape what leads the next bull market.

• iShares MSCI ACWI ex U.S. ETF stock is trading near recent highs. Where is ACWX stock headed?

In his latest "Flow Show," Bank of America's Chief Investment Strategist Michael Hartnett makes a sweeping call: international stocks are set to outperform the U.S. in the second half of the 2020s.

For most of the post-Global Financial Crisis era, U.S. exceptionalism dominated global markets.

Between 2009 and late 2024, the S&P 500 — as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — had outperformed the iShares MSCI ACWI ex U.S. ETF (NASDAQ:ACWX) by over 280%.

The dollar stayed strong. Mega-cap tech dominated.

Now the tide is turning.

The End Of U.S. Exceptionalism?

In February 1994, international stocks made up 67% of global market capitalization. By March 2003, that share fell to 44%.

It rebounded to 59% in May 2008 and again in October 2010. In December 2024, it collapsed to just 33%.

It has now rebounded to 38% of the $97 trillion global equity market.

Hartnett said this share is set “to rise further on fiscal excess, populism, end of deflation.”

According to Hartnett, AI disruption may prove more negative for the U.S. than for overseas markets. The U.S. economy is heavily services-based. The S&P 500 index is dominated by technology and platform companies. AI threatens white-collar labor markets and corporate revenue models concentrated in software and digital services.

By contrast, emerging markets indices lean more toward manufacturing, industrials and natural resources.

If AI compresses service-sector margins, U.S. earnings could feel the pressure first.

That flips the script of the past decade.

The Streaks That Matter

Price action is already reflecting the shift.

The iShares MSCI ACWI ex U.S. ETF (NASDAQ:ACWX) has climbed for 10 straight weeks. That streak has never happened in the fund's history.

The iShares MSCI Emerging Markets ETF (NYSE:EEM) has rallied for nine consecutive weeks. That marks its longest winning streak since 2005.

The iShares MSCI Emerging Markets ex China ETF (NYSE:EMXC) has outperformed the SPDR S&P 500 ETF Trust (NYSE:SPY) for 10 straight weeks.

Momentum is no longer confined to U.S. mega caps — it is spreading decisively overseas.

A New World Bull?

Hartnett frames it as a structural shift, not a tactical trade.

The combination of fiscal expansion, geopolitical fragmentation and inflationary pressures favors real assets and manufacturing-heavy economies.

In this context, market leadership may rotate toward regions that lagged during the U.S. tech boom.

For most of the past 15 years, overweighting international equities meant underperforming compared with simply investing in U.S. stocks.

If Hartnett is right, the second half of the 2020s could look very different.

The crown may no longer belong exclusively to Wall Street.

Photo: Vit-Mar via Shutterstock