Incredibly Bullish Macro Environment: 3-Minutes MLIV
Summary
- The macro backdrop remains incredibly bullish due to global fiscal stimulus, easy monetary policy, and an "incredible CapEx bubble."
- We are currently in the "inflation stage" of this bubble, which will drive volatility and sector dispersion.
- A multi-year trend of "Rest of the World" (RoW) outperforming the US is entrenched; US stocks are viewed as expensive relative to global peers.
- Asia is a key focus, specifically "derivatives" of the China trade (Hong Kong, Korea) rather than China A-shares directly.
- Latin America, particularly Brazil, is favored for its commodity exposure in a global growth environment.
Trade Ideas
"I think Latin America still very interesting... Brazil still has the commodities that the world needs." The "incredible CapEx bubble" and "fiscal stimulus" mentioned earlier drive demand for raw materials. Brazil (EWZ) is a resource-heavy economy that benefits directly from this inflationary/growth stage of the bubble. LONG Brazil and Latin America as a play on the commodity supercycle and global stimulus. A sharp drop in commodity prices or political instability in Brazil.
Mark Cudmore
Macro Strategist (Implied Bloomberg/MLIV)
"We're in a multiyear trend of US underperformance after a 14 year trend of U.S. outperformance... Many stocks in the world are not particularly expensive. US stocks are still expensive." The speaker identifies a regime shift where capital rotates out of expensive US markets into cheaper international markets. To capture this "Rest of World" outperformance, one should buy broad international indices excluding the US. LONG international equities to capture the valuation gap and rotation. Continued US tech dominance or a global recession that strengthens the USD (flight to safety).
Mark Cudmore
Macro Strategist (Implied Bloomberg/MLIV)
"I think Hong Kong's always the better way to play the China trade... I think Korea, it's really a two stock story... that Korea will continue to do well." The speaker prefers indirect exposure to China via Hong Kong (EWH) due to better governance/market access. For Korea (EWY), the "two stock story" refers to the dominance of memory chip giants (Samsung and SK Hynix), implying that betting on Korea is effectively betting on the semiconductor/memory cycle. LONG Asian proxies (Hong Kong and Korea) as the preferred vehicle for Asian growth. Geopolitical escalation in the Taiwan Strait or Korean peninsula; China's economy failing to stabilize.
Mark Cudmore
Macro Strategist (Implied Bloomberg/MLIV)
"US stocks are still expensive... disruption we're seeing... volatility is going to get worse." While the underlying story is bullish, the US is explicitly called out as the underperformer in a relative value trade. The risk/reward is lower in the US compared to international markets due to high valuations and impending volatility. AVOID or UNDERWEIGHT US broad indices in favor of international diversification. The US "exceptionalism" trade continues, driven by AI monopolies (Mag-7) defying valuation gravity.
Up Next
This Bloomberg Markets video, published February 25, 2026, features Mark Cudmore discussing EWZ, ILF, DBC, VXUS, ACWX, EFA, EWH, EWY, SSNLF, SPY, QQQ. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Mark Cudmore · Tickers: EWZ, ILF, DBC, VXUS, ACWX, EFA, EWH, EWY, SSNLF, SPY, QQQ