(The views expressed here are those of the author, the Founder

and Global Strategist at TPW Advisory.)

By Jay Pelosky

NEW YORK, Sept 8 (Reuters) - Labor Day has passed,

school is back in session and the gridiron is back in action.

That means one thing: we're about to see fund managers' mad

dash to year-end as everyone seeks to boost performance -

especially those active managers who were caught offsides by

President Donald Trump's tariff drama this year.

Amid this scramble, here are three counterintuitive points

to keep in mind.

(1) The equity bull market is far from narrow.

Look at equities through a global lens, and the frequently

heard complaint about the 'narrow market rally' seems flat out

wrong. The equity bull market has broadened globally thus far in

2025, with many indices hitting all-time highs, not just the S&P

500. These include the ACWI (all countries), ACWX (all countries

excl. U.S.), and EAFA (developed markets excl. U.S. and Canada).

And the EEM (emerging markets) has also recently hit a new

52-week high.

Importantly, technicals signal that there could be stronger

performance ahead. All Star Charts recently noted that over

two-thirds of stocks in the S&P 500 are above their 200-day

moving average (DMA). That's the most in the past 12 months.

Additionally, SentimenTrader, an independent investment

research firm, reports that all major Asia Pacific equity

markets are above their 200-DMA for the first time in four

years.

Moving to fundamentals, investors remain bullish on Europe,

likely reflecting the stimulus that will be kicking in over the

next year. Investors expect stronger growth in the European

Union to translate into average EPS growth of 11% in 2026, based

on consensus expectations. That's right in line with forecasts

for the U.S. Meanwhile, the consensus 2026 EPS estimate for

Germany is 14%, ahead of the U.S. forecast. This could mean more

funds flowing into Europe, further broadening the global rally.

A pause or pullback in the global equity rally is always

possible, of course, especially given the frantic Trump-driven

news cycle. But the last eight months suggest such moves are

likely to be short-lived, with managers potentially viewing any

dips as buying opportunities.

(2) The 'Mag 7' could be a liability for U.S. equities.

One of the biggest areas of concern for global equities is

the biggest market: the U.S.

On the one hand, consensus estimates are rising for U.S.

large caps' third-quarter earnings. But, among investors, there

is also growing concern that the 'Magnificent Seven' tech giants

- the main drivers of U.S. outperformance in recent years -

could soon become an anchor holding back U.S. equities.

The big worry is that sky-high 'Mag 7' earnings could 'come

back to earth' in the coming quarters. That's because the

artificial intelligence buildout appears to be forcing a

structural change in many of these firms' business models from

'capital light' to 'capital heavy'. Investors may fear that this

could also mean a switch from 'cash heavy' to 'cash light'.

Bank of America recently reported that "capital spending as

a percentage of operating cash flow for 'Magnificent 7' has hit

55%, up from 20% in 2012." Moreover, the consensus expectation

is that 'Mag 7' EPS will fall from its +30% average over the

past few years to roughly 15% in the coming quarters, according

to FactSet, while the other 493 SPY stocks are expected to see

their EPS growth more than double to the mid-teens.

This could be a big challenge for U.S. equities as a whole,

given the enormous weight these companies have in the main U.S.

stock indices.

(3) The most important 10-year yield to watch is in China.

In China, investors would be wise to focus on what's now

arguably the single most important global macro number: China's

10-year government bond yield. It's currently around 1.8% and

likely heading up closer to 2%.

This number will tell us how much success Beijing is having

in its two-pronged attack on deflation: its 'anti-involution'

campaign to control excess production and its use of fiscal

stimulus to boost consumption.

Chinese equities remain the leader among global markets over

the past two years (yes, two years), according to Bank of

America. But the anti-deflation fight will be key if we're to

see stronger corporate earnings in China, as well as higher

multiples and rising stock prices moving forward.

True, China has posted some negative economic data points in

recent months, but it's still early days for Beijing's new

stimulus strategy, and there are some signs that it might be

bearing fruit. For example, the most recent China RatingDog

(formerly Caixin) services PMI rose to 53.0 from 52.6, helped by

summer travel and new orders, while the composite PMI rose to

51.9 from 50.8.

If Beijing is successful, that could very well be the most

important global macro development of the coming year, far more

significant than whatever the next twist is in the ever-evolving

Trump saga.

Summer is officially over. Let the race to year-end begin.

(The views expressed here are those of Jay Pelosky, the Founder

and Global Strategist at TPW Advisory, a NYC-based investment

advisory firm. You can follow Jay on Substack at The Tri Polar

World).

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(Writing by Jay Pelosky; Editing by Anna Szymanski and Susan

Fenton)