International stocks outperforming by 700bps. Weak dollar part of story (adds 200bps). Developed international markets benefit from higher weights in cyclical sectors (industrials, financials - half the index) that do better when growth is strong, and have less tech than US, which is benefiting returns.

Past sharp rallies in Japanese stocks after decisive elections on hope for growth via fiscal spending. Thinking was spending would weaken yen, but yen strengthened and stocks rose (unusual negative correlation break). Potential for capital inflows on better growth prospects to boost yen. Japanese stocks would balance stronger yen headwind on earnings with capital flow tailwind. If flows are gradual, markets adjust. Swift allocation change could unwind yen carry trades, but repeat of Aug 2024 magnitude unlikely as net short yen position is 1/10th the size. Yen didn't move much during recent Bitcoin/software sell-off, so concerns may be overdone.