If the American exceptionalism narrative vis-à-vis markets feels exhausted — ad nauseam — to you, you’re not wrong.
Week in and week out, particularly since the election, investors of all shapes and sizes, analysts, strategists and market documentarians, tell the “TINA” tale. Here’s the short version: The US isn’t just the proverbial “cleanest dirty shirt,” it’s the only clean shirt in a world full of dirty ones.
That’s certainly true in the macroeconomic context. Sociologically and from the perspective of good governance, there’s nothing “clean” about America at all in 2024, but at least for now, market participants unbothered by the (unnerving) prospect of societal dissolution and democratic backsliding can ignore such trivial concerns to bask in the glory of the hyperscalers, the monopolies, the demigods and even God himself.
I realize some of you (many of you, even) have seen the charts by now, but for those who haven’t, the figures below, from the December vintage of BofA’s Global Fund Manager Survey, are well worth a mention and a look (click to enlarge, as always).
As you can see on the left, the self-reported net Overweight to US shares has never been higher in the history of BofA’s poll. The month-to-month increase in US equity allocations — i.e., the Trump-inspired bid for US shares at the expense of RoW equities and, one assumes, other assets competing for AUM, was a remarkable 24ppt.
The figure on the right suggests EM equities were a source of funds for US stock-buying. Survey panelists have virtually never favored US shares over EM as much as they do currently. Similarly, the relative Overweight in the US versus Europe is now the most extreme since the eurozone debt crisis (and the fourth largest in a quarter century).
What could go wrong (speaking of exhausted, ad nauseam refrains)? Well, a lot actually. For example, the legislative process in D.C. could prove even more contentious than usual over the next four years, just ask de facto President Elon Musk, who spent most of the week trying to engineer a Christmas government shutdown.
And then there’s the threat of what Chrystia Freeland called “the coming tariff war,” which could push up inflation, cause a recession or both. It’s also possible that a run-it-hot approach to managing a US economy that’s growing briskly enough already will force the Fed not just to abandon plans to cut rates further, but to actually hike rates in 2025.
Investors aren’t oblivious. Indeed, the top tail risks in the December FMS were “Global trade war triggers recession” and “Inflation causes Fed to hike.”
Asked at the December presser whether the Fed might be compelled to raise rates next year, Jerome Powell said that’s not an especially likely outcome, but added that, “You don’t rule things completely in or out in this world.” (Wise words.)
Another finding from the December installment of BofA’s poll: A third now expect “no landing” for the US economy, the second highest share since the question was first asked in 2023.
Referring to this and your weekly, we can only hope that the ongoing takeover by Musk and Theil & his accolades are thwarted by Trump’s petulant ego. That’s mighty comforting, aint it?
Yeah, but I’m starting to wonder if Musk is transcending traditional definitions/roles of/for oligarchs. He’s turning into something out of a science fiction movie where, you know, he’s a Wizard of Oz-type or Jeff Goldblum’s character in Thor: Ragnarok
He has moved beyond simple wealth accumulation and/or the confirmation of his genius that may bring. It looks like he believes that he alone can rid the world of stupidity?
Come on Donald, do you really want to be ridiculed as Elon’s butt boy?
Elon wants to rule mars, the Dems wouldn’t make it easy, but trump will
Elon wants to rid the world of stupidity?!??!! The first task will prove to be the hardest — how to remove it from that stubborn mirror??
I am so glad my nerd friend group talked me into watching that movie. It’s so perfect. For one thing, Taika Waititi is a comedic genius. The whole thing is just hilarious. I was not expecting that. Then as a bonus, I get to watch Anthony Hopkins chewing on the scenery. Such a gifted actor in such a cheesy movie, it’s chef’s kiss emoji.
If the Musk and Trump bromance makes it to next fall it would be a shock.
+1
I’ve told several friends that I set the over/under at Valentines Day. Have not booked any bets yet but there are some who are considering.
It appears to be a contest between Trump and Musk for the dumbest most egotistical statement of the year 2024 . More to come next year .
To me, Elon Musk has always been one of these villain in old James Bond movies. The one that felt so unrealistic with their wealth, technological advance, or army of foot soldiers apparently ready to die for their nationless leader. EM is actually even more powerful than these unrealistic fictions. What a world!