Global Stock Market Reversal! BofA Securities July Report: End of US Stock Dominance, Return of Value Investing

BofA Securities' July 9 mid-year review predicts global stocks (ex-US) will outperform S&P 500 by 11pp in 2025, best performance since 2009. Core allocation strategy: equity preference for value and quality assets, fixed income using "prudent yield" strategy (current yield 5.2%, 12-month return 6.9%), inflation hedge via real assets. Economic outlook: 2025 global GDP growth 3.0%, Fed no cuts in 2025, potential 100bp cuts in 2026. Significant soft-hard data divergence: hard data +0.3 standard deviations above average, soft data -0.6 below average, pessimistic sentiment may catalyze H2 rally. AI and defense viewed as non-overhyped long-term themes: AI enterprise adoption rose from 4% to 9%, NATO 2035 defense spending target 5% of GDP. ETF valuations elevated, median PE 15.5x, aerospace/defense 2 standard deviations above average.