🥛 Why the U.S. stock market sucks 📉

GM. This is Milk Road Macro, the newsletter that hits like realizing your hometown pizza place is mid… and the place across town is absolutely cooking.

Here’s what we’ve got for you today:

✍️ Everything you need to know about “the global broadening trade”.
🎙️ The Milk Road Macro Show: The Commodity Supercycle Is Back: The Macro Shift That Could Reshape Markets.
🍪 NVIDIA reported impressive earnings.

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Prices as of 10:00 a.m. ET.

EVERYTHING YOU NEED TO KNOW ABOUT “THE GLOBAL BROADENING TRADE”

The U.S. stock market sucks.

Or at least, it has over the past few months - relative to elsewhere.

Across the globe, international stock markets are flying higher.

Meanwhile, the major U.S. indices are just sitting around doing nothing.

So what’s going on?

Which global stock markets are performing the best?

Why is this divergence happening?

And is it time to look beyond the U.S.?

Let’s take a look…

What’s going on in the U.S.?

In the two months since late December, the S&P 500 has essentially gone nowhere.

Just one big choppy range.

Since December 26, the S&P 500 has been almost exactly flat.

Source: TradingView

And if we look at the Nasdaq (specifically U.S. tech), this has been even more disappointing.

Since December 26, it’s down 2%.

Source: TradingView

And what’s going on in the rest of the world?

Meanwhile, across the rest of the world - it’s a very different story.

In the same two-month time period - the vast majority of international stock markets have significantly outperformed the U.S.

This is particularly true of South Korea (KOSPI), which is up a gigantic 48% since late December (priced in dollars).

KOSPI has just been ripping higher over the past two months and has not stopped.

It’s on an absolute rager.

Source: TradingView

This massive outperformance is primarily due to two big Korean chipmaker stocks - Samsung and SK Hynix - which have exploded higher in recent months due to an ongoing global memory chip shortage.

Japan (NIKKEI) has also performed very well - up 18% since late December (priced in dollars).

Source: TradingView

In fact, practically all stock markets in developed economies have outperformed the U.S.

Even the UK stock market (FTSE) has moved 9% higher since late December (priced in dollars).

And the UK stock market is one of the most boring and generally underperforming stock markets in the world - mostly filled with financials, energy, and consumer staples, and basically zero tech.

Source: TradingView

Emerging markets (smaller, less developed economies) have also performed well.

The iShares MSCI Emerging Index Fund is up 16% since late December (priced in dollars).

Source: TradingView

In particular, Brazil (EWZ) has been a big winner, up 25% since late December (priced in dollars).

Source: TradingView

Brazil is a “commodity-heavy” stock market and is partially benefiting from rising commodity prices (metals and energy).

Legendary investor Stanley Druckenmiller - who has never had a down year at his firm since inception in the 1980s - disclosed a big position in EWZ in his most recent 13F filing.

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EVERYTHING YOU NEED TO KNOW ABOUT “THE GLOBAL BROADENING TRADE” (P2)

So, why the big divergence between the U.S. and everybody else?

This big divergence is unusual - because typically you see global stock markets largely moving together with the U.S., most of the time.

However, while the S&P 500 has been sluggish - it’s important to note that the equal-weight S&P 500 (RSP) is up 5% since late December.

Source: TradingView

So what does this tell us?

It tells us that the mega-cap U.S. stocks are underperforming, while the smaller large-cap stocks are performing well.

The weakness in the U.S. stock market mostly stems from its heavy tech weighting.

Software (IGV) is down 30% in recent months due to AI disruption fears.

And this makes up a large chunk of the S&P 500 (19%) and Nasdaq (26%).

Source: TradingView

Similarly, the Magnificent 7 (Amazon, Meta, Google, Nvidia, Tesla, Microsoft, Apple) are noticeably underperforming, partially due to CapEx spending fears.

And the Mag 7 make up an even larger chunk of the S&P 500 (33%) and Nasdaq (61%).

Source: TradingView

But there’s also an explanation to be found in the type of global economic environment we are currently in.

Right now, we’re in a strong global “cyclical reacceleration”, or “business cycle expansion”.

The global business cycle is heating up.

Source: Bank of America

And in these environments, historically - international stock markets as a whole often outperform the U.S. (most recently in 2016/2017, and 2020/2021).

Additionally, many areas of the world are in the midst of big fiscal plans, including Europe (significantly increased defense spending) and Japan (big fiscal stimulus from a new leader).

And this is a big bullish catalyst for local stock markets.

Wrapping up

So, is now the time to look beyond the U.S.?

I would say - potentially yes.

The global cyclical reacceleration is likely to continue for the medium-term.

And international stock markets are more insulated from ongoing “AI disruption fears” and “CapEx spending fears”, relative to the tech-heavy and mega-cap-heavy U.S. indices.

It’s important to note, however, if you are thinking about moving away from the U.S. - this “global broadening” theme is already well underway.

In fact, it started a good few months ago.

You’re late to the party if you’re thinking about diversifying globally now - and this trend won’t last forever.

Particularly - I’m looking at the raging South Korean KOSPI and thinking that now is probably not the right time for this one…

That ship has most likely sailed.

However, I do think it’s likely that global stock markets will, on the whole, continue to generally outperform the U.S. over the medium-term.

COMMODITY SUPERCYCLE, MACRO SHIFT 📈

In today’s episode, we sat down with Sal Gilberti, co-founder, CEO and CIO of Tucrium Trading, to talk about why commodities are back in focus and what that could mean for markets in 2026.

Here’s what you’ll hear:

Why commodities can diversify, they follow supply, demand, and weather more than narratives.
Corn and soy cycles: use cost of production as an anchor, then fade drought rallies.
China soybean demand, tariffs, and how politics can override normal market economics.
AI power demand, copper and oil tactics, and risks in daily reset leveraged ETFs and XRP products.

Hit play and see for yourself 👇️