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  • In the past decade, the strong performance of the mega-cap growth stocks (i.e. FANGs) have been significantly supporting US equities, which have constantly outperformed European and the Rest of the World (RoW) equity markets.
  • We previously saw that the surge in global liquidity, which we compute as the total assets of the major central banks, has been one of the major drivers of US growth stocks, therefore pushing the SP500 index to new all-time highs.
  • Interestingly, this chart (source: BoA) shows that US equities have historically outperformed European and RoW equity markets for the past 100 years.
  • Hence, even though US stocks are starting to appear 'expensive' according to a range of value metrics (i.e. CAPE, Price-to-Sales...), the strong historical performance of US stocks could continue to increase international interest on US risky assets.

Source: BoA, Global Financial Data