The S&P 500 has added $9tn in market capitalisation since the end of March, yet something feels off. Investors describe this as one of the weirder market environments in years—a "Trump Trade 2.0" that mirrors the post-election rally of late 2024 but with a twist. The "buy America" mantra and higher yields remain, but the stronger dollar that defined version 1.0 has vanished as expectations for a more restrictive Fed have evaporated.

Earnings are delivering. Companies beating on both EPS and revenue are up +1.2% on average, while those missing expectations plunge -4.5%—a brutal divergence. The concentration is striking: just 22 companies in the S&P 500 have outperformed the index over the past month, marking a 30-year low in breadth. Markets are trading on fundamentals rather than hype, leaving traders wondering how much higher stocks could fly with usual optimism behind them.

European stocks are feeling the pain, trailing global peers by 7% due to greater sensitivity to the Iran war. Bank of America analysts are blunt: even a swift end to the conflict won't reverse Europe's underperformance. Their projection? Around 15% downside for EU equities. The market has looked through weakening macro data so far, but more signs of growth deterioration could spark serious jitters.