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1. US exceptionalism has peaked.

Tariff-related uncertainties and the risk of a US recession are fueling discussions on how to trade the demise of US exceptionalism.

Jefferies’ Christopher Wood said US stocks’ market value has reached its peak and further corrections in American assets are likely.

He recommended investors to consider adding Indian and European assets instead.

And regardless of where trade ends up, Apple said it was pivoting all U.S.-bound iPhone production to India by 2026, doubling the region’s capacity as trade tensions with China intensify.

2. US hard data versus soft data.

Hard data, (such as unemployment numbers or industrial production) that everyone is focused on is lagging, it still reflects the reality prior to the Liberation Day.

Soft data (such as consumer confidence) is more up to date and indicates that we are already in a recession. It depends on tariffs negotiations how long it will last.

3. Bank of America’s Hartnett warns to sell the rebound in US stocks and dollar.

4. Foreign investors are selling US stocks.

Foreign investors have sold $63 billion of US equities since the start of March, Goldman Sachs strategists estimate.

5. Elation turns to caution.

A month after chasing the market with multiple upgrades for European stocks, strategists are getting cautious with their targets, spooked by volatility and trade tensions.

European stocks have held up relatively well this year, with the continent’s benchmark index up 2% for the year, a sharp contrast with the S&P 500’s 9% drop. Still, effective US duties are the highest in a century, which is likely to negatively impact growth.

Despite tariff uncertainty, the European market is indeed benefiting from an expansive fiscal policy, led by Germany, and much lower interest rates than in the US. The European Central Bank is expected to cut its benchmark as much as three times by the end of the year, taking the base rate close to 1.5% and keeping a two-percentage point differential with the Federal Reserve.

“We think trading conditions could remain choppy amid still-elevated macro/policy uncertainty,” said Citigroup Inc. strategists led by Beata Manthey. “However, should trade negotiations continue successfully, we still see scope for 5-10% upside for European equities by year-end.”

On a relative basis, they added that Europe is in a better position given supportive monetary and fiscal policy. “Big picture, the end of US exceptionalism could well be Europe’s chance,” they say.

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