International Equities Are Outperforming — But Is The Rotation Real This Time?

The article argues that international equities are outperforming the S&P 500 in 2026 and that, unlike prior rotations, this one has stronger structural and cyclical support. Europe’s fiscal pivot (including Germany’s debt-brake reform) and ECB easing are providing genuine earnings support, while Japan’s corporate governance reforms are improving returns. Emerging markets are selective: India looks structurally strong, China has stabilized but carries geopolitical risk. The rotation’s durability hinges on three conditions — a weaker/stable dollar, European fiscal translating into earnings, and U.S. mega-cap tech not re-accelerating. If those hold, international equities’ risk-reward is meaningfully improved, though the author warns it’s not a guarantee and advises diversified, sized exposure rather than an all-or-nothing bet.