Bloomberg Surveillance · Wednesday, July 1, 2026
Jay Pulowski of TVW Advisory highlights a significant opportunity in global equities, particularly outside the US, driven by a 'spending supercycle' in AI, climate, and defense. He notes that earnings growth is converging across the US, emerging markets, Japan, and Europe, but valuations have not followed suit, presenting a compelling case for non-US equities. Pulowski suggests that emerging markets, trading at 11 times earnings compared to the S&P 500's 21 times, are poised for significant gains due to this valuation convergence and a potential devaluation of the dollar.
“The good news is we're early and we can, I think globally in particular, go considerably higher. And I think the real opportunity is that we have a global growth convergence taking place as a result of what we're calling a spending supercycle, as Europe, Asia and the America's spend on AI, climate and defense. And what that's doing, Tom, is it's meaning that earnings growth is converging. So you have the same kind of earnings growth we're enjoying here in the US, in the emerging markets in Japan coming in Europe as well. But what isn't converging is valuation. And that's the opportunity, right.”
“Right now, for example, EM trades at eleven times earnings, the SMP trades at twenty one times earnings, the same earnings growth forecast for both this year and next. Why should there be such a huge valuation divergence. It shouldn't exist, and I don't think it will exist as we go forward the next couple of years.”
“So to me, the medium and long term investment opportunity we're presented with in investing outside the US as global equity leadership shifts from the US to the rest of the world, led by emerging markets through evaluation convergence in a currency convergence is very very compelling.”