U.S. Economy Could Come to a ‘Virtual Standstill’ in Next 6 Months, Warns Rockefeller International Chairman

On July 9, Ruchir Sharma, Chairman of Rockefeller International, shared his insights on CNBC’s “Closing Bell Overtime” regarding the emerging opportunities in global markets, particularly as the U.S. economy shows signs of deceleration.

Rockefeller International, part of Rockefeller Capital Management, provides a range of financial services, including wealth management, asset management, and investment banking. The firm focuses on delivering tailored financial solutions to high-net-worth individuals, families, and institutions globally.

Sharma is a prominent investor, author, and financial commentator. Before joining Rockefeller in 2022, Sharma spent 25 years at Morgan Stanley Investment Management, where he held significant roles, including Head of Emerging Markets and Chief Global Strategist. At Rockefeller International, Sharma acts as an advisor and global brand ambassador, contributing his expertise to the firm’s global family office and international activities. He is also the founder and Chief Investment Officer of Breakout Capital, an investment firm focused on emerging markets.

Sharma is widely recognized for his extensive writings and commentary on global economic trends. He has authored several best-selling books, including “Breakout Nations,” “The Rise and Fall of Nations,” and “The 10 Rules of Successful Nations.” His latest work, “What Went Wrong with Capitalism,” was published in 2024. Sharma frequently contributes to major publications such as the Financial Times, where he writes bi-weekly columns, and his insights are sought after in both print and broadcast media.

U.S. Economic Slowdown

Ruchir Sharma pointed out that the U.S. economy is exhibiting a slowdown, marking the second consecutive quarter where growth is significantly below 2%. Sharma emphasized that this trend might lead to a virtual standstill within the next six months as the effects of past stimulus measures wane. According to Sharma, the artificial boost provided by these stimuli is fading, revealing a more subdued growth trajectory.

Global Expansion and the Rise of International Investments

Sharma noted that the rest of the world, having been less dependent on such stimulus, is experiencing a broader global expansion. This, he argued, suggests a potential resurgence in international investing. However, Sharma highlighted that current investor enthusiasm is heavily skewed towards AI-driven companies, overshadowing other sectors. He stressed that the U.S. market’s outperformance is primarily driven by mega-cap tech stocks like Nvidia. When viewed on an equal-weighted basis, U.S. market performance is comparable to that of European and emerging markets.

India: A Unique Bull Market

In discussing emerging markets, Sharma singled out India as a unique case. He described India as the most expensive market globally but also highlighted its true bull market status. Unlike other markets, India’s bull market is characterized by broad-based growth, with mid and small-cap stocks outperforming large-cap stocks. Despite geopolitical complexities, such as India’s diplomatic dynamics with Russia, Sharma argued that geopolitical risks are not a major deterrent for investing in emerging markets.

Geopolitical Influences and Market Realignments

Sharma addressed the broader geopolitical landscape, noting how U.S. sanctions on Russia have spurred countries to seek alternative alliances and reduce their dependence on the U.S. dollar. This realignment, he suggested, is contributing to the rising attractiveness of emerging markets. Central banks’ increased gold purchases further reflect this shift.

Mean Reversion and Market Dynamics

A critical issue Sharma raised is whether the concept of mean reversion in markets is dormant or dead. He expressed hope that mean reversion is merely dormant, as its revival could benefit emerging markets. Sharma noted signs of this with the recent stabilization of the dollar following its significant appreciation.

European Market Outlook

Regarding Europe, Sharma painted a mixed picture. He pointed out that recent election results in France and the UK indicate voter dissatisfaction with the status quo, pushing for policy changes. Despite a cyclical uptick in consumer spending in Europe, Sharma remained cautious about its long-term prospects. He argued that while Europe presents some value, it lacks significant long-term growth compared to emerging markets, which offer both value and growth potential.

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