Investors sought safety in government bonds last week as the AI selloff rattled stock markets worldwide. Yields eased across most of the major bond markets. The stock market selloff has been hardest on the markets that soared the most this year. October is ending with the US well ahead of the rest of the world. That validates our recent shift to market weight on the Go Global portfolio strategy. Here’s more:
I. Stock Market Performance
The Stay Home vs Go Global ratios have rebounded sharply since mid-year, driven by US outperformance (chart). They remain below their early 2025 peaks but are heading back up.
The US MSCI’s share of the All Country World MSCI’s market cap has risen back to 65.3% (chart). Its share of forward earnings is 54.3%. That 11-point gap is the widest since January 2025. US stocks again are pricing in far more than their share of global earnings.
October’s biggest losers were this year’s AI winners. South Korea finished the month at the bottom of the country ETF rankings, down 16.4% in dollars (chart). Taiwan fell 10.4%. Switzerland topped the board with an 8.8% gain, followed by Mexico (4.8%). The US slipped 0.9%, while the All Country World ex-US ETF fell 2.9%.
II. Stock Markets Earnings & Valuation
