The U.S. Market Premium Is About To Unravel, Warns Global Investor | Jay Pelosky
Speakers
Jay Pelosky
— Founder, TPW Advisory
Summary
Jay Pelosky presents a tripolar world spending super cycle driving global growth. He recommends underweighting developed market bonds, overweighting commodities, and favoring emerging markets over the US. He highlights specific long ideas in oil, copper miners, gold miners, China A-shares, and thematic ETFs in clean energy, robotics, autonomous defense, and semiconductors.
- The US premium is expected to dissipate as policy volatility increases and valuation gaps favor the rest of the world.
- Developed market sovereign debt, especially US Treasuries, should be avoided in favor of equities and commodities.
- Commodities are structurally supported by AI, climate, and defense spending; oil, copper miners, and gold miners are specific longs.
- Emerging markets, led by China and Europe, are seen as cheap, underowned, and poised for secular outperformance.
- China is bullish due to defeating deflation, domestic asset allocation shifts, and dominance in clean energy and robotics.
- Europe benefits from potential ceasefires and increased German fiscal spending.
- Japan's transition from deflation to inflation is bullish for its equities.
- Thematic investments in clean energy, robotics, autonomous warfare, and semiconductors are top performers in the model.
Trade Ideas
Avoid US equities, premium dissipating
The US is acting like a bad emerging market with high policy volatility and a huge valuation premium. Over the next several years, the US premium will dissipate as the rest of the world reprices upward and the US reprices downward. The US trades at 21-22x forward earnings while EM trades at 12x, yet EM earnings growth is stronger. Underweight US equities in favor of cheaper, underowned markets.
Long clean energy, Iran catalyst
Clean energy is one of the top five positions in our model. Iran is the single best advertisement for clean energy, as it shows the vulnerability of fossil fuel dependence. Clean energy is no longer 'woke' – it is clean, secure, and available. The spending super cycle supports massive investment.
Long EM equities, huge discount
Emerging markets trade at 12x forward earnings versus 21-22x for the US, yet EM earnings growth this year and next is forecast to be better. EM is completely underowned – foreigners own less than 5% of Chinese bonds and stocks. We believe we are in the early innings of a secular leadership change from the US to EM equities.
Avoid developed market sovereign debt
We are in a fiscal age with a spending super cycle on AI, climate, and defense. Governments and private sector are spending aggressively, making developed market sovereign debt unattractive. We have been zero weighted in DM sovereign debt for 3 years and see no reason to own Treasuries for years. Underweight bonds and use the freed-up allocation for equities and commodities.
Long oil on spending super cycle
The AI age requires physical commodities; 'digital eats the physical'. We went long oil in the fall when Wall Street expected Brent at $52, driven by the spending super cycle, not geopolitics. We have trimmed but still hold the position. Oil remains a tactical long within a broader commodity overweight.
Long copper miners, earnings exploding
Copper miners are 'printing money' and will continue to do so for years. The spending super cycle and electrification demand are structural. This is our favorite position right now. Earnings are off the charts, and the market is underappreciating the profit generation.
Long gold miners, huge margins
Gold miners have enormous margins because they were profitable at $1,500/oz gold, and gold is now $4,500/oz. Their profit margins are better than tech. We are long gold miners as part of our precious metals exposure.
Watch water, AI demand driver
AI requires a lot of water, and so do people, crops, and animals. We have a position in water as part of our commodity exposure, though it hasn't worked well yet. It remains a core thematic position worth monitoring.
Long Europe on ceasefire trade
Europe is the big winner from the dual ceasefires – US-Iran deal and Russia-Ukraine ceasefire. Germany is finally spending with low debt/GDP. European equities are outperforming the US and are exposed to a ceasefire trade. We are quite bullish Europe.
Long Japan on inflation regime
Japan has transitioned from deflation to inflation. It has the lowest real rates among major economies and needs to raise rates. Rising rates confirm inflation and growth, which is bullish for Japanese equities. Inflation is far better than deflation for a country with 200% debt/GDP.
Long China A-shares, defeating deflation
China is one of the last countries that will have to raise interest rates because it is finally defeating deflation. This is very bullish for Chinese corporate profits and domestic investor asset allocation. Domestic investors are shifting from property and low-yield savings into equities. We are very long the A-share market.
Long China tech, clean energy leader
China dominates the clean energy cycle and is the biggest winner from Iran. Demand for its EVs, solar panels, batteries, and wind turbines is exploding. China is applying its industrial scale and speed to embodied AI, robotics, autonomous defense, autonomous vehicles, and biotech. We are very bullish China tech across the spectrum.
Long autonomous defense theme
Autonomous warfare is the number one performer in our model over the last month. The fusion of AI and defense is demonstrated in Ukraine and Iran. Asymmetric autonomous warfare is a major and growing theme.
Long robotics, top performer
Humanoid robotics is one of the top five performing positions in our thematic model. The robotics ETF is heavily exposed to China, Japan, and Korea. The push toward automation and embodied AI is a key theme in the spending super cycle.
Long semiconductors, earnings strength
Semiconductors are one of the top five positions in our model. The global spending super cycle on AI, defense, and electrification is a massive demand driver for semiconductors. Earnings are growing rapidly.
Up Next
This The David Lin Report video, published May 26, 2026, features Jay Pelosky discussing SPY, ICLN, EEM, TLT, WTI, COPX, GDX, Water, VGK, EWJ, ASHR, KWEB, Autonomous warfare, ROBO, SMH. 15 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Jay Pelosky · Tickers: SPY, ICLN, EEM, TLT, WTI, COPX, GDX, Water, VGK, EWJ, ASHR, KWEB, Autonomous warfare, ROBO, SMH