The Wall Street Journal reports:

Keith Moffat was born in Canada, lives in the Netherlands and has an Irish passport. But until recently, his stock portfolio was (almost) all-American.

At one point, around 90% of Moffat’s investments were in U.S. stocks. He sold all of his American holdings in the past few weeks and piled into exchange-traded funds that hold shares of European and other international companies, alongside European defense stocks. Moffat said the U.S. market is overpriced. But President Trump’s rhetoric referring to Canada as the 51st state has also stung.

“It was the dagger in the heart,” he said. “There are a lot of Europeans with money who are upset over what’s happening in the U.S. Why would we put our money there?”

Just two months after JPMorgan Chase declared American exceptionalism “the broad and dominant” investing theme of 2025, ordinary investors across the world are looking elsewhere. Instead of riding the wave of U.S. outperformance, they are parsing the potential implications of tariff wars and major shifts in U.S. foreign policy. And for much of this volatile stretch, markets in China and Europe outpaced expectations.

The case for European stocks got a jolt Friday when the German government green-lit a plan to inject up to €1 trillion, equivalent to $1.09 trillion, into the nation’s economy, with much of the funds supporting the country’s defense efforts. Germany’s DAX index has shot up almost 15% this year, and some investors hope that heavy spending will pull the country out of its slump. Countries across Europe are ramping up domestic military spending as the U.S. signals an increasingly isolationist foreign policy position. As a result, shares of the region’s defense companies are booming. [Continue reading…]