Ashmore Group questions the sustainability of US exceptionalism, arguing that short-term economic resilience masks deeper structural vulnerabilities. The US benefits from global capital inflows and dollar dominance, but rising fiscal deficits and excessive debt pose long-term risks.

The London-based asset manager believes the US will start consolidating its fiscal deficit this year. However, fiscal consolidation will most likely add pressure to companies’ profits against a backdrop of exuberant earnings growth expectations. The insight suggests investors should reassess their US exposure, considering global diversification to mitigate risks.

“US exceptionalism now has a disruption narrative with DeepSeek emerging as a serious potential threat to the hitherto near US-monopoly on Generative AI and its supply chain. The combination of a micro narrative (DeepSeek) with a macro driver (fiscal consolidation) should encourage investors to rotate away from US assets. Gustavo Medeiros, Head of Research at Ashmore Group.

Read the full insight here.