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Investors are now starting to worry whether US stocks had gotten ahead of themselves, pricing in the best-case scenario for tax reforms, fiscal stimulus and deregulation.

The ongoing political drama in Washington is leading to doubts where President Trump would be able to get his economic agenda through. It seems that his healthcare reform bill may not pass in the current form and that could lead to troubles for tax reforms.

Many investors are getting concerned about valuations in the US and looking for better values outside of the US.

Bank of America Merrill Lynch’s latest survey showed money managers pulling money out of US equities, and pouring money into emerging markets, utilities and staples, per FT.

After many years of underperformance, emerging market stocks are shining. We can see signs of improving economic growth in many parts of the developing world. Manufacturing activity is getting into high gear as can be seen from PMI surveys.

China has stabilized and capital outflows have slowed down. Indian stocks have been doing so well due to some important reform measures taken by the government and a major electoral victory for the ruling party.

Brazil and Russia are emerging out of brutal recession. Inflation in these countries is now receding. Apple has boosted Taiwan shares to a large extent, since many of the Apple’s suppliers are in Taiwan.

Even South Korea stocks have been surging despite political turmoil in the country because investors hope that the new government will initiate some sweeping reforms, particularly in the area of corporate governance.

Cautious tone from the Fed also helped EM stocks.

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