Watchtower Reversing

American exceptionalism represents a sort of notion that American has unique advantages in terms of economy, politics and dollar assets which has made America ourperform the rest of the world continuously.

This concept has been reinforced in 2023-2034 pushed by the easing fiscal and monetary policies which support the economy to keep relatively high speed growth；also the leading position of US tech is highlighted in the new round of AI which further has catalyzed the strong performance of equity markets; Trump's winning the election reinforces the narrative of American exceptionalism, which makes the investors be more confident in the US economy and dollar assets for the foreseeable future.

But abruptly, with the inauguraton of President Trump, American exceptionalism began to reverse. From the beginning of this year, US equity markets underforms the rest of the world. It seems that the trading of American exceptionalism failed. What exactly happens behind the scene?

Firstly, the unexpectedly weak economic data raises the concern of stagflation; the most importantly, the tariffs policies implemented by the Trump administration create more uncertainties and futuremore intentify the concern of stagflation; also the establishment of DOGE which is regarded as a radical move to reduce the government spending is hindering congress budget negotiation, which makes expansionary fiscal policy unlikely be implemented in the future, furthermore overshadows US economic outlook; another important point, that is the breakthrough of China's DeepSeek breaks the monopoly of US technology, reshapes the competitive landscape of technology globally and catalyzes the sharply plunge of US equity markets.