Bloomberg Businessweek ICYMI: The Risks to US Exceptionalism
Aug 27, 2025
Ben Inker, Co-Head of Asset Allocation and Portfolio Manager at GMO, shares his insights on the current market dynamics impacting U.S. investors. He highlights concerns about political interference in the Federal Reserve, inflation risks, and the implications of leadership changes. The discussion also delves into the valuation of U.S. stocks compared to global markets, questioning the rationale behind their premium. Inker addresses the challenges facing U.S. companies and the effects of government involvement in private sectors, particularly defense.
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Fed Independence Risks Markets
- Political pressure on the Fed could push rates lower than economic fundamentals warrant, hurting bonds and the dollar.
- A weaker dollar and higher long-term yields would amplify inflation and market instability in the U.S.
Hedge For Fed-Driven Dollar Risk
- Monitor U.S. bond and dollar exposure if political interference in the Fed increases.
- Position portfolios for potential dollar weakness and rising long-term yields to hedge policy risk.
U.S. Premium Masks Domestic Weakness
- The U.S. stock market trades at a large premium to the rest of the world driven by a concentrated set of winners.
- Supply shocks, tariffs, and immigration policies create unique headwinds for U.S. growth versus other countries.