How ‘the mother of all bubbles’ will pop; the end is near
Having tagged America’s inordinately large share of global financial markets as “the mother of all bubbles” in my last column,
https://englundmacro.blogspot.com/2024/12/the-mother-of-all-bubbles.html
the main pushback I got, even from the few people who share my view, was that there is no sign this bubble will deflate any time soon.
The bulls say America can remain dominant, owing to impressive earnings of the country’s corporations. But US earnings growth would not look so exceptional if not for the supernormal profits of its big tech firms.
Growth and profits are also getting an artificial lift from the heaviest deficit spending ever recorded at this stage of an economic cycle, by far.
More likely, by some point next year, investors will balk and demand higher interest rates
That is often how bubbles end: unexpectedly.
When flying in such thin air, it doesn’t take much to stall the engines. All the classic signs of extreme prices, valuations and sentiment suggest the end is near.
Ruchir Sharm Financial Times 16 December 2024
https://www.ft.com/content/9a0da0d6-92b4-4034-ac25-7b4abcbb0bbe
The writer is chair of Rockefeller International.
His latest book is ‘What Went Wrong With Capitalism’
Ruchir Sharma
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