A top strategist at BCA Research is urging investors to exit U.S. markets and shift toward European assets and Bitcoin, citing a dramatic divergence in global economic outlooks.
Dhaval Joshi, chief strategist at BCA, said in the brokerage’s latest strategy report that recent U.S. trade policies are creating stagflation at home but deflation abroad.
“Trump’s tariffs are inflationary for the U.S., but they are deflationary for the rest of the world,” Joshi wrote in note.
The report recommends overweighting U.K. government bonds over U.S. Treasurys, arguing that rising inflation in the United States will weaken demand for traditional haven assets.
Joshi compared the current U.S. policy path to the United Kingdom’s Brexit moment in 2016, when gilts lost ground.
“If Trump’s tariffs are ‘America’s Brexit,’ then U.K. gilts will recoup ten years of underperformance versus U.S. T-bonds,” he said.
On equities, BCA argues that U.S. markets are still inflated by enthusiasm over artificial intelligence.
The brokerage sees this as a fading trend, with valuations built on shaky assumptions that dominant tech firms will maintain leadership in the next technological wave.
“The companies that are the big winners of one technology are rarely the big winners of the next,” Joshi wrote.
European stocks, by contrast, are trading at a steep discount. BCA says that gap, currently around 35 percent, could narrow significantly.
“As the AI bubble fully deflates, Europe’s valuation versus the U.S. will rerate by about 25 percent,” Joshi said.
Within Europe, the brokerage flags healthcare as particularly undervalued. Despite showing identical post-pandemic earnings growth to their U.S. peers, European healthcare stocks are trading at a record discount. BCA recommends overweighting German healthcare stocks versus the U.S. healthcare sector.
Bitcoin, meanwhile, is emerging as an unexpected winner from the global shift in capital.
With investors losing confidence in the U.S. dollar, BCA says they are turning to Bitcoin as a hedge.
“For the first time ever, the biggest beneficiary of the dollar exodus was Bitcoin,” Joshi wrote.
He argues that Bitcoin, like gold, benefits from a growing perception that it is a non-confiscatable asset in a fragile fiat system.
“If so, then all three components of Bitcoin’s value are going to trend much higher in the coming months and years,” Joshi said, suggesting that his earlier price target of $200,000 may be too low.
A key recommendation in the report is to shift structurally out of U.S. stocks and bonds and into Europe and Bitcoin.
