John Woods: «The US is Not So Exceptional Anymore»
US exceptionalism was driven by its growth story and relative attractiveness compared to other major economies. According to Lombard Odier’s John Woods, these factors have recently diminished.
Market volatility has been lately on the rise as investors grow increasingly concerned about an economic slowdown in no small part fuelled by worries about tariffs imposed by US President Donald Trump.
At Lombard Odier, there is no forecast of an imminent recession with expectations of positive global growth in 2025, though at a slower rate than in 2024. On markets, the bank believes that turbulence will continue temporarily before improvements occur.
«We've probably got another quarter of volatility but into the second half of this year, I actually think that growth will start to stabilize,» said Lombard Odier Asia chief investment officer John Woods in a media briefing attended by finews.asia. «The Fed will start to roll out their cuts, the industrial cycle will normalize, profit growth will normalize and I think markets stabilize. I do actually anticipate the S&P closing the year higher than it is right now.»
Relative Attractiveness
Despite the benign outlook, Woods notes that the relative attractiveness of the US is no longer as appealing.
«The US is not so exceptional anymore,» he explained. «What marked US exceptionalism essentially from the rest of the world was its growth story, […] thematics around tech and AI, and actually, sort of the numerator, denominator effect, meaning there wasn't much else going on in Europe and China. Well, that's changed.»
Europe: «Most Extraordinary Story»
In contrast, Woods believes that Europe is «the most extraordinary story almost in a generation».
«Germany's decision to take its foot off the debt break has profound consequences because it won't only be Germany that will propagate around the rest of Europe,» he said. «We will see tens of billions, if not hundreds of billions, being spent on military upgrades, infrastructure upgrades, technology upgrades over decades.»
China: More Foreign Flows Needed
With regards to China, Woods notes that there has been greater investor enthusiasm but this has largely been limited to a local demand.
«For China tech to go to the next level, I think we need to start to see foreign flows coming into the country right now,» he noted. «I think this has been very much a domestic story but if we were to go meaningfully to the next level, [foreign flows have] to accelerate dramatically.»
