The US has reached unprecedented levels of dominance in global financial markets, raising concerns of a potentially massive economic bubble, according to Ruchir Sharma, Chair of Rockefeller International, Fortune reports.
In a recent column for the Financial Times, Sharma highlighted the extreme concentration of global investment in the US, warning that the market’s current trajectory reflects a phenomenon of “epic proportions.”
Sharma, who authored What Went Wrong With Capitalism, argued that global investors are placing more money in the US than ever before, which he described as a case of “American exceptionalism” in markets that has now gone too far. He pointed out that US companies now make up 70% of the leading global stock index, a stark increase from 30% in the 1980s. Meanwhile, the US economy’s share of global GDP remains at 27%, suggesting a disproportionate level of investment compared to the country’s economic size.
While acknowledging the strength of the US economy and the profitability of American companies, Sharma warned that the dominance of US stocks—particularly the boom in a select group of tech companies driven by AI—indicates broader market imbalances. He explained that indices which adjust for the tech giants show the US outperforming the rest of the world by more than 4-to-1 since 2009.
The trend extends beyond stocks. In 2024 alone, foreign capital flowing into US debt markets has reached $1 trillion, nearly double the amount attracted by the eurozone. Additionally, the US controls more than 70% of the global private equity and credit markets, further cementing its financial dominance.
Sharma noted that historically, US market booms—such as during the 1920s and the dot-com era—would generally lift other markets. However, today’s strong US market is having the opposite effect, drawing capital away from other economies. This shift, he cautioned, could exacerbate economic instability in other countries, particularly by weakening currencies and forcing central banks to raise interest rates, which could slow down economic growth and worsen financial conditions.
He described the situation as the “mother of all bubbles,” warning that the US market is over-owned, overvalued, and overhyped to a degree never seen before. Sharma’s concerns are echoed by Allianz Chief Economic Advisor Mohamed El-Erian, who has previously discussed how the US market’s strength could pull capital from other regions, potentially creating both positive and negative effects for the global economy.
Mark Spitznagel, co-founder and CIO of Universa Investments, has also sounded alarms about a possible bubble. He has been warning for years about what he calls the “greatest credit bubble in human history,” with growing concerns that the bubble may soon burst.
Despite these warnings, optimism on Wall Street remains high. Following strong stock market performance in 2023 and 2024, analysts predict continued growth in the US market in 2025. Bank of America has set a target for the S&P 500 to reach 6,666 by the end of next year, while CFRA forecasts it to hit 6,585. Market strategist Ed Yardeni is even more bullish, setting a target of 7,000 for the index, indicating a potential 15% surge.
