This episode explores the shifting global economic landscape and the end of the long-standing "US exceptionalism" trade in markets. Against the backdrop of a 15-year period where US assets consistently outperformed, the hosts and guest, Ozan Tarman (Vice Chair of Global Macro at Deutsche Bank), discuss whether this trend is nearing its end. More significantly, the conversation centers on the implications of rising global competition, particularly from China's technological advancements (exemplified by the DeepSeek AI model) and Germany's substantial fiscal expansion. For instance, the discussion highlights the surprising surge in European stocks and the unexpected shift in fund managers' perceptions of the most crowded trade, from big tech to gold. As the discussion pivoted to the US's economic policies, Tarman analyzes the impact of tariffs and the potential for a "Brexit-like" slow degradation of the US economy. In contrast, he also presents alternative scenarios, including a potential return to US exceptionalism or a continued rise of Europe and China. Ultimately, the episode concludes with a discussion of potential trading strategies, focusing on the need to monitor key players (Trump, Powell, Xi) and the possibility of the Fed implementing QE to counter economic downturns, highlighting the evolving dynamics of global capital allocation.
