State of the Union vs. State of the Markets: Capital moves

Global investors are turning away from US stocks despite President Trump’s stock market optimism in last night’s State of the Union address, claims the CEO of one of the world’s largest independent financial advisory organizations.

The analysis from Nigel Green of deVere Group comes as President Trump used his State of the Union address to highlight record highs in US stock markets, presenting stock performance as clear evidence of the economic strength under his administration.

Still, new investor positioning data points to one of the most significant rotations away from U.S. stocks in decades.

Although U.S. benchmarks have reached record territory in recent months, performance this year is lagging behind the major European and Asian indices.

The S&P 500 has been trading within a narrow and largely directionless range, modestly negative this year even as foreign markets rise.

Regular global surveys of fund managers show the strongest positive allocation to eurozone assets ever.

In recent months, overweight positions in European stocks have soared, while underweight positions in U.S. stocks have more than tripled.

Nigel Green, founder and CEO of deVere Group, says: “President Trump is right to highlight record levels in the market. But markets are forward-looking mechanisms. When we examine capital flows rather than speeches, we see a clear and measurable broadening of exposure outside the US.

“Market participants report that while there is no large-scale capital flight, incremental global flows are increasingly being diverted away from the United States.”

He continues: “For more than a decade, American exceptionalism has anchored global portfolios, driven in large part by the dominance of the technology sector.

“As volatility around AI-related names increases and economic growth moderates to 1.4% annually, allocators are reassessing concentration risk.”

The shift reflects multiple converging pressures. The extraordinary dependence on a small group of big tech stocks has left US indices vulnerable to sector-specific pullbacks.

At the same time, improving fiscal momentum in parts of Europe, especially Germany, and stabilizing sentiment indicators in the eurozone are encouraging a reweighting of global exposure.

Importantly, recent policy adjustments from Washington, including recalibrations around tariffs, have not led to a sustainable recovery of US equity leadership. Relative performance trends indicate that the redistribution is structural rather than reactive.

The CEO of deVere added: “Of course, the US remains an important driver of global growth.

“But capital markets are evolving. Investors are not reducing their exposure to the US out of sentiment; they are, wisely, increasing diversification as risk-adjusted opportunities expand elsewhere.”

The record inflow into European equity funds underlines the scale of the shift. For the first time in decades, the dominance of US equities within global benchmark allocations is being actively questioned by institutional investors.

The contrast between the State of the Union’s emphasis on record highs and the calmer rebalancing within global portfolios highlights a defining characteristic of markets in 2026: aggregate index levels alone no longer determine the price of capital.

As the year progresses, sustained earnings performance and renewed industry leadership will determine whether U.S. stocks regain relative momentum.

For now, the data shows that global capital is gradually repositioning, with the balance of flows suggesting the shift is accelerating.

Nigel Green concludes: “President Trump’s State of the Union address celebrated where the markets have been. Investors are positioning themselves for where they are going.

“Those may be two very different conversations.”