The bull no one is talking about

Risk appetite is quietly returning to global assets

Behold the powerful breakouts unfolding across the globe! European banks are handily outperforming the Mag 7. Japanese stocks have decisively eclipsed their 1989 highs. Even China’s consumer internet companies – long written off as “uninvestable” – have surged more than 40% this year.

This is no longer an all-American bull market. But is anyone paying attention? Hardly. International markets are receiving almost zero coverage. Instead, social media feeds are a firehose of addictive and largely useless content, curated by algorithms built not to inform but to keep us endlessly scrolling. The result: many investors are distracted from one of the most compelling global investment setups in decades.

We get it. Negativity sells. Data show a steady rise in pessimism across financial media over the past half-century – and notably, the macro mood has never really recovered from the 2008 financial crisis. To be fair, journalists should report the news as it is. This year has been unusually dark. Just six months into Trump’s second term, it’s clear that the course of world events has changed. America was once the champion of free trade, the anchor for global security, and the gold standard on governance. All of those things are now shifting. 

But the main market obsession continues to be tariffs. Investors are told they spell doom. Yes, tariffs are economically damaging. But investors often get it wrong when they cling to simplistic cause-and-effect models – headline input A leads directly to outcome B – especially when fixated on a single variable. Trump’s tariffs are big, but they are not the only force shaping a complex global economy.

Step back, and a bigger story emerges: global markets are quietly breaking out:

Europe is back

Fresh from a trip to Europe, it’s clear: the cyclical bottom is in (see our Postcard From Europe: A New Bull Market Begins and Why a less-favourable trade deal shouldn’t derail Europe’s bull market). The market is finally warming to our view that many international markets are attractive – in large part because tariff threats have forced countries to pursue structural reforms and secure trade deals beyond the U.S. (see our Super Trend, The Protectionist Paradox).

Nowhere is this more evident than Europe, where policymakers have unleashed a potent cocktail of monetary, fiscal, and regulatory easing. Yet investors remain skeptical, pointing to fragmented capital markets, rigid labour laws, and the absence of AI-fueled tech giants. These are valid concerns, but this is a cyclical story, and the turn is already underway. Credit growth is accelerating. German manufacturing has returned to expansion after 37 months of contraction. Households look healthy, with solid real wage growth and savings north of 15% of disposable income. Most telling: European banks – those crucial barometers of liquidity and risk appetite – are leading the market.

In a defining moment for Germany – and by extension, the EU – policymakers have agreed to break from constitutional budget constraints, clearing the way for a colossal €500 billion infrastructure and defense spending plan. The measures amount to 11.4% of Germany’s GDP – enough to stave off recession risks and begin rebalancing the economy away from its heavy reliance on exports. Europe’s largest economy is, at long last, committing to borrow and spend massively on defense and infrastructure. And the mood shift is real: even with plenty of skepticism still in the air, a quiet optimism is starting to take root – palpable everywhere we went.

The significance of this shift can’t be overstated. The Eurozone’s stagnation throughout the 2010s was shaped by two powerful forces: (i) a massive deleveraging cycle in the South following the credit-fueled boom of the 2000s, and (ii) self-imposed austerity in the North, which brought on the most contractionary fiscal stance since the Great Depression. Both trends have now run their course – setting the stage for a reflationary boom in the second half of the 2020s.

Europe is hated, under-owned, and on track for a solid turnaround in 2026. Don’t overcomplicate it – this is the sweet spot for investors.

Asia’s AI awakening

For much of the past three years, Chinese internet stocks endured a bruising bear market. Regulatory crackdowns, delisting fears, and slowing growth left global investors deeply skeptical. “Uninvestable” and “China” became inextricably linked.

But cycles turn. Today, AI has emerged as a powerful new catalyst. China’s internet giants hold what AI needs most: massive reservoirs of data from the world’s largest digital population. Tencent, Alibaba, and Baidu are already weaving AI into search, commerce, gaming, and logistics – moving from hype to real monetization across hundreds of millions of users. Just as significant, Beijing has pivoted from restraint to support. AI is now framed as a national priority, unlocking capital, policy tailwinds, and a new era of innovation.

Meanwhile, markets remain fixated on America’s mega-cap AI champions. U.S. leaders trade at nosebleed multiples while China’s AI beneficiaries are priced for stagnation. The result? A rare asymmetry: China’s consumer internet stocks may be one of the most compelling, underappreciated ways to participate in the global AI revolution.

The U.S. dollar has broken down

America’s policy mix now carries a blunt message to foreigners: You will pay. Tariffs, remittance taxes, and even “revenge taxes” have all been implemented or floated in Congress. The signal to global investors is unmistakable: Diversify away from dollar assets.

The market is already voting, with the U.S. dollar index recently slicing below its 2022-2025 range. Even after this decline, the greenback remains historically expensive – on par with past secular peaks in 1985 and 2002. Meanwhile, it still accounts for nearly 60% of global FX reserves, wildly out of proportion to America’s shrinking share of global output.

Reserve shifts rarely happen overnight. They move slowly, as central banks and sovereign wealth funds steadily accumulate alternatives. The dollar’s recent breakdown, then, should not be viewed as an isolated move. Rather, it is the opening act of a global capital rotation. History is clear here: Sustained dollar weakness has always been rocket fuel for international assets. Local currencies strengthen, capital costs fall, and equity markets surge. The last two dollar downcycles – the mid-1980s to mid-1990s, and the early 2000s – delivered multi-year runs of international outperformance. Today, the same conditions are lining up again.

Investment implications

The world is never short of risks – but right now it is also flush with international opportunity. Europe is climbing out of its malaise. Asia’s AI platforms are on the cusp of re-rating. And the dollar’s breakdown is igniting a broad capital rotation. Risk appetite is quietly returning to global assets.

For investors, the message is straightforward: Diversify away from U.S. concentration and lean into select international markets. Many are under-owned, relatively cheap, and entering a powerful new cycle. Forstrong client portfolios are already capturing this shift with strong outperformance this year. This is the big, beautiful bull market no one is talking about – and it has only just begun.

Tyler Mordy, CFA, is CEO and CIO of Forstrong Global Asset Management Inc., engaged in top-down strategy, investment policy, and securities selection. This article first appeared in Forstrong’s Insights page. Used with permission. You can reach Tyler by phone at Forstrong Global, toll-free 1-888-419-6715, or by email at tmordy@forstrong.com. Follow Tyler on X at @TylerMordy and @ForstrongGlobal.

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