America's stock-market boom will end in 2025 as markets punish the US for its yawning deficits, Rockefeller chairman says

• Ruchir Sharma says the trend of US stocks outperforming the rest of the world may end in 2025.
• The Rockefeller chairman pointed to signs that the stock rally in the US looked unsustainable.
• He said investors' growing attention to the rising deficit in the US may be a turning point.

The market expert Ruchir Sharma says that the stock market's momentum looks likely to sputter in 2025 and that it could falter as investors grow wary of the US's mounting debt problems.

In an op-ed article for the Financial Times published on Monday, the Rockefeller International chairman said he believed the US stock market could soon underperform global peers, breaking a long-running trend of US outperformance.

He estimated that over the next year the top stocks in the US could underperform the global market by about 10% — reflecting a much worse performance than in 2024, when the top US stocks outperformed the market by about 20%.

"Momentum investing looks poised to crash in a way that could hit many investors hard," Sharma wrote.

Speaking to CNBC later on Monday, Sharma pointed to signs that the trend of US outperformance looked unsustainable.

For one, valuations in the US remain high, but sentiment is more bullish compared with other areas of the world.

The US economy makes up about 30% of the global economy, but US stocks make up about 70% of the global equity market, Sharma said. Still, nearly all investors expect the US to keep outperforming the rest of the world.

"I've never seen such strong groupthink prevail, which is that at the start of this year, it's almost everyone seems to have the same view, which is that the American stock market will keep outperforming, the US dollar will keep rising, and the AI trend and mania will continue with the big tech companies benefiting," Sharma said.

He later added, "I'd be shocked if the groupthink is so right as it is now with its strong conviction of US outperformance."

Sharma speculated that US stocks' performance could weaken when the market turns its attention to mounting debt in the US. The federal debt clocked in at $36.1 trillion on Monday.

Sharma said the US had been given a "free pass" for its high level of borrowing, given that the dollar is the world's leading reserve currency.

But he wrote in the op-ed article that with more long-dated US Treasury supply poised to hit the market in the coming months, investors may start "punishing" the US for its deficits, with demand at future Treasury auctions weakening.

Bond-market vigilantes — traders who try to force the government to exercise more fiscal constraint by staging a sell-off or refusing to buy government bonds — have started to make their mark in other areas of the world, like Brazil and France.

"There's no country in the world today running a deficit number like the US is running, and that has been artificially propping up growth," Sharma told CNBC, adding that debt was the "leading trigger" to end the US momentum trade. "That could begin to really prick markets," he said.

Sharma has previously sounded the alarm about a major stock correction. In an op-ed article last month, he said the US market looked like it was in the "mother of all bubbles," though most forecasters on Wall Street expect another positive year for stocks in 2025.