Is The US Empire Crumbling?

Last proper day in the US for me.

What an incredible ride.

I’ve learned plenty along the way too.

So today I’ve got an outlook for US markets over the next year (and the next 5 years) wrapped in the following riddle…

Is the empire crumbling?

Short answer for the next 5 years: No!

(As wild as that sounds, given the doom and gloom headlines…)

But the short answer for US markets for the next year is: Strap in!

I base this on a bit of a pulse check I’ve taken on my country of birth over the last year.

You see, most of my high school mates turned out well, which means they’ve got money in the US market.

Among the old buddies I’ve encountered:

• A manufacturing exec running a family business with 40 idle crypto mining rigs
• A former security-tech sales executive with illiquid pre-IPO holdings
• A crypto fund exec who is stressed about his VC investments and needs to go back to work soon
• A former marketing guru for Coinbase, working on a new tech application for the fine arts

So their takes on the market give you a good sense of the sentiment.

And my journey to the US took me to New York, New Jersey, North Carolina, Pennsylvania, Georgia and California.

I’ve seen both Main Street and literal Wall Street.

And it means I’ve seen a decent swathe of the country.

You know how you can just get an ephemeral sense of the “vibe” when you travel?

My reading on the vibe is… tense but positive.

Which brings me to my outlook and conclusions on how to invest over the next year, and five years in both the US and Australia…

Rough seas ahead, and some odd scenarios

Here are some things to look out for in the next year:

• AI/credit unwinding event – this could be a trigger for a new financial bailout in the US. I’m looking closely at what role crypto plays in this new environment
• AI debt “bait and switch” – we all know the hyperscalers have issued immense amounts of debt – if they don’t need this debt to fund the data centre build out, what happens to this pile of cash? I need to do some more research before I can make a firm opinion.
• In Australia, a small buffer against the crash – Australia hasn’t been as frothy as other markets due to a range of reasons, not least of which is the recent tax changes. This could work in its favour if things turn sour.

And over the next 5 years:

• A US crash + bailout leading to a once-in-a-lifetime buying opportunity – after the smoke clears, investors may get one last chance to jump on AI assets in the US at depressed valuations.

  Don’t try to catch a falling knife, but be prepared to jump in once the trend on the NASDAQ chart threatens to change.

• In Australia – if you have the cajónes to stick with quality commodity companies even during a crash in the US, it could be wise to keep some dry powder for that event.

  I don’t see the commodity supercycle fizzling out any time soon, and the next 5 years should see outstanding returns as the real “Main St” economy revs up, helping drive prices down.

So there it is, not entirely bearish, depending on what timeframe you are looking at.

Signing off from the hills of Los Angeles, next time you hear from me, I’ll be back in Australia.

Source: Lachlann Tierney

Stay frosty amid this growing AI sell-off…