Is the Rest of the World Selling America?

This episode explores the shifting global investment landscape and its impact on the U.S. economy, particularly focusing on the narrative shifts driving capital flows over the past three decades. Against the backdrop of the dot-com boom (1995-2001), the U.S. experienced a surge in foreign investment, fueled by internet mania and strong economic growth, leading to a strengthening dollar and budget surpluses. More significantly, the rise of globalization and China's entry into the WTO (2001-2011) shifted the narrative, favoring global diversification and emerging markets as the U.S. dollar weakened and the country faced rising debt. For instance, the period saw significant returns in emerging markets, contrasting sharply with the lagging U.S. stock market performance. From 2011-2024, however, the narrative swung back to favor the U.S., driven by the rise of big tech and a strengthening dollar, resulting in strong U.S. stock market performance. Currently, early indicators suggest a potential reversal, with the U.S. facing decreased foreign investment and a weakening dollar, potentially signaling a long-term shift in the global economic narrative. What this means for investors is the importance of maintaining global diversification, as the dominance of any single market can shift dramatically over time.