(The opinions expressed here are those of the author, a

columnist for Reuters Open Interest)

By Mike Dolan

LONDON, June 10 (Reuters) - A consequence of U.S.

President Donald Trump's global economic upheaval seems to be

greater "home bias" in investing - going some way toward

explaining the year's relative performance while seeming chaos

sows stimulus around the world.

Many of the half-year appraisals of Trump's often erratic

trade and economic agenda attempt to cut through policy noise to

suggest where the world will ultimately pan out.

Larry Fink, boss of BlackRock ( BLK ), the world's largest asset

manager, opined last week about a "second draft of

globalization", one positioned somewhere between the rejected

inequities of unfettered global trade and capital and another

alternative of stifling economic nationalism and capital curbs.

The new middle ground can still enjoy open markets, Fink

reckons, but they will likely be steered, prodded and tempted

home to ensure household savings first benefit the country of

those doing the saving.

"People will fuel their country's economic growth and own a

piece of it," Fink argued in an op-ed in the Financial Times.

For Fink, this "re-globalization" aims "not just to generate

prosperity but to aim it towards the people and places left

behind the first time."

Trump's attempted re-industrialization of America is a

version of this idea. Using trade barriers, bilateralism,

carrots and sticks, he seeks to kick-start U.S. manufacturing

while accepting that lower trade deficits will also see lower

overseas investment flows to U.S. markets and smaller government

to boot.

The political pitch is to create more well-paid factory jobs

instead of super-wealthy asset owners. Easier said than done.

MAKING EVERYWHERE GREAT AGAIN?

But whatever one thinks about Trump's "America First"

strategy, that formula seems to be working best overseas.

Germany's dramatic fiscal reboot this year, which was

catalyzed by both Trumpism and far-right populism at home, also

speaks to the new globalization theme.

Europe at large now appears to be prioritizing investment in

its own industrial base, security, digital infrastructure and

green technologies - hoping to unleash both under-utilized

savings at home and attract capital from Wall Street.

Britain is apeing these industrial and defence policy

trends, while Japan is attempting to unlock its domestic pension

savings too. Meanwhile, Chinese fiscal stimulus has also risen.

So while trade war jitters abound, it sets up potentially

synched fiscal boosts next year.

TS Lombard's Rory Green and Alexandros Xenofontos pointed

out on Monday there could be strong fiscal stimuli in Europe,

China and possibly the U.S. in 2026 - a trifecta that's only

happened twice in 30 years, in response to the COVID-19 pandemic

in 2020 and the 2007-2008 global financial crisis.

That possibility goes some way to explain why, despite all

the market volatility and hype surrounding a U.S. cyclical

slowdown, global stock markets are once again hitting record

highs.

It also explains why it's been a bad year for global

sovereign bonds and the U.S. dollar - as stimulus requires more

borrowing and foreign investors shed overweight U.S. holdings.

Even though Wall Street stocks are just about positive

for the year, they are underperforming the likes of equity

indexes in Germany and Hong Kong by 25%-40%.

If even some of the estimated $7 trillion of European money

that flowed into U.S. equities over the past dozen years were to

be repatriated, markets would price such a move very quickly.

And despite all the concern about the U.S. economic and

political direction, American money is not rushing offshore.

Mutual fund data shows net U.S. flows to global equity funds

remain negative through this year. In fact, they're at their

most negative in more than two years. Cash flowing to U.S. money

market funds, meantime, has climbed back above $7 trillion again

in the latest week, near the record high set in April.

'KERNEL OF TRUTH'

Does that data mean the ultimate outcome of Trump turning

the world upside down could actually be positive?

In an article for the Council on Foreign Relations' Foreign

Affairs magazine titled "Tell Me How This Trade War Ends," Emily

Kilcrease and Geoffrey Gertz reckon that despite all the Trump

chaos, there is a "kernel of truth" in his insistence that the

world trade system needs a re-set.

They conclude there is no going back to a world where the

U.S. championed ever freer trade. Neither is it inevitable that

the world will retreat into outright protectionism, as long as

Trump pushes other U.S. allies into a new, less-lopsided trading

framework.

"Trump's shock to the system may not be pretty. But it could

open the way for a much better system," Kilcrease and Gertz

wrote.

"Trump has turned the United States into a revisionist power

seeking to shatter what remains of the economic order. Thus far,

his approach has been needlessly chaotic," they said. "But there

is still an opportunity to wrest a positive outcome from the

current tumult."

At nearly the mid-point of the year, investors seem tempted

by this "glass half full" view of 2025's disruption. The

optimists are trying to see through the inevitable twists and

turns ahead to focus on the possibility of a new, more positive

equilibrium down the line.

In truth, much remains murky and unknowable at this point.

The opinions expressed here are those of the author, a

columnist for Reuters.