For the mean reversion to continue there needs to be fundamental support in the form of earnings. That support is happening. Since 2014 the US has dominated the global markets as US earnings growth has been better than EAFE and EM, and the payout ratio (dividends plus buybacks as a percent of earnings) has been higher.  A one-two punch in favor of the US, which went a long way to earning its higher P/E multiple. The chart below shows how companies in the US have retired way more shares than in both EAFE and EM.  Especially EM has been chronically in dilution mode until recently. Say what you will about financial engineering, it does have an impact on valuations. But guess what? In recent months EAFE (more so than EM) has become more competitive to the US, perhaps not so much on the earnings front, but definitely on the payout, both for the dollar amount and the percentage of earnings (payout ratio). Below we see that the payout ratio for the US is 75% and for EAFE it’s now 76%. Interestingly, while the payout ratios are the same, the composition is not. In the US, dividends are 30% of earnings and buybacks are 45%, while for EAFE dividends are 49% and buybacks are 27%. Which do you prefer? Dividends are considered more sacred and less cyclical than buybacks, so I would take the former over the later, which puts EAFE at an advantage (not to mention its lower valuation). This tells me that the world stage, at least for developed markets, has become a more level playing field. I would consider that good news as we navigate a very top-heavy US Market.