US Stocks To Underperform For Years Ahead | Kevin Muir

As capital starts to move out of US equities for international markets

There's a lot of urgency right now in America to reduce the fiscal deficit via the new D.O.G.E and also to reduce its trade deficit via the threat of tariffs.

Both initiatives are creating a lot of disruption right now, and have their fair share of vocal supporters and detractors.

Are they likely to work?

And at what cost?

To discuss, we're fortunate to speak today with market veteran Kevin Muir, founder and editor of The Macro Tourist, the highly-acclaimed newsletter that currently ranks as one of the top financial Substacks in the world.

In a nutshell, Kevin thinks nearly all US assets, including the dollar, are woefully overvalued.

Just as capital flowed into the US over the past decade, pushing all these assets ever higher, he expects the coming years to see capital flowing out of the US, leading to chronic underperformance vs international assets.

To learn why, click here or on the video below:

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Adam’s Notes: Kevin Muir (recorded 2.25.25)

EXECUTIVE SUMMARY:

• Kevin argues that the global economy is experiencing a shift reminiscent of the 1980s, where macroeconomic factors and asset class movements are becoming more significant. The era of global cooperation and economic stability is ending, giving way to mercantilism and protectionism. Investors must pay closer attention to macroeconomic trends to avoid being on the wrong side of major economic shifts.

• The U.S. has been running the largest fiscal deficit among developed nations, contributing significantly to its economic outperformance. The COVID-19 response alone resulted in a fiscal stimulus of 25% of GDP, compared to 16-18% in other developed economies. With the Trump administration signaling a reduction in deficit spending, Kevin warns that this shift will likely slow economic growth and reduce corporate profits, ultimately leading to weaker stock market performance.

• Kevin points out that investor sentiment has dramatically shifted from bearish in early 2023 to overwhelmingly bullish in 2025, despite significant macroeconomic risks. The equity risk premium has collapsed from 6% in 2020 to nearly zero, with U.S. equities trading at 22 times forward earnings, making them historically expensive. Kevin believes this is an unsustainable setup, suggesting a potential 37% market correction if earnings decline and valuations revert to historical norms.