Core Viewpoint - The article discusses the emerging structural risk facing Wall Street due to potential "buyer strikes" from European investors, who hold approximately $10.4 trillion in U.S. stocks, threatening the foundation of the long-term bull market in U.S. equities [1]. Group 1: Market Sentiment and Trends - European investors are increasingly seeking to diversify their investments and reduce exposure to U.S. assets, a trend that began in April 2025 and has accelerated recently [1]. - The sentiment shift is driven by concerns over the U.S. government's aggressive stance and the weaponization of dollar assets, leading to a significant potential impact on U.S. stocks, bonds, and the dollar's exchange rate [1]. - European investors hold 49% of all foreign-held U.S. stocks, indicating that any sustained withdrawal could significantly disrupt the market [1]. Group 2: Performance Comparison - Historically, U.S. equities have outperformed developed market peers, but this trend has reversed since Trump's presidency, with the Stoxx 600 index rising 32% in USD terms last year, compared to a mere 16% increase in the U.S. benchmark index [5]. - The performance of other markets, such as the Korean Kospi index and the Canadian S&P/TSX index, has also outpaced U.S. stocks, prompting European investors to reconsider their asset allocation [5]. Group 3: Geopolitical and Financial Implications - The U.S. government's stance on globalization contrasts sharply with the reality of foreign investment, particularly from Europe, which has historically driven U.S. stock market gains [4]. - The potential for a "European divestment" is underscored by specific cases, such as Danish pension funds discussing the divestment of U.S. assets due to geopolitical tensions [8]. - The current environment is seen as unsuitable for full exposure to U.S. stocks, with some investors predicting a long-term reduction in U.S. asset weightings [7]. Group 4: Trust in International Order - There is a growing crisis of confidence among investors regarding the rules-based international order, as the U.S. appears to be abandoning previously supported international norms [9]. - This shift raises concerns about the reliability of the dollar and U.S. investments, leading to a more cautious investment approach among European investors [9].

Group 1 - Investors reduced their holdings in the euro in December according to the latest global fund manager survey by Bank of America [1] - There was a decrease in holdings of bonds and healthcare stocks, while there was an increase in materials, technology stocks, and U.S. equities [1] - A net 13% of investors believe the euro is undervalued, which is consistent with the results from the previous month [1]