Is U.S Exceptionalism Cresting? – January 27, 2025



A just-published report concluded that the investment landscape will be more challenging than last year, and financial asset markets are likely to experience higher volatility with much lower net returns.

One far-from-the-consensus view that was explored in the report involved whether the massive outperformance of U.S. assets was at risk of ending:

  • U.S. profits and margins are already very elevated, and thus unlikely to improve even further on a multi-year perspective.
  • U.S. equity and FX valuations are historically stretched.
  • And global investor positioning is already overwhelmingly long the U.S., with a deep aversion to non-U.S. assets.

A catalyst for a change in relative performance is not currently evident. However, amidst the escalating threats of a major U.S.-led trade war, the surprise of 2025 would be if growth improved markedly outside the U.S. and cooled the enthusiasm for U.S. equities and the dollar. The bar for such an outcome is very low!

Net: the MRB TradeBook currently has a pro-growth bias with modest non-U.S. exposure. However, we stand ready to make material opportunistic shifts as the year progresses.





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