Nasdaq Surges 31% Since April Driving U.S. Exceptionalism

U.S. exceptionalism, the concept that the U.S. economy and its financial markets are distinct from those of other nations, remains robust, particularly evident in the equity markets. Since early April, the Nasdaq index, which is heavily weighted towards technology stocks, has surged by 31%, while the broader S&P 500 index has rallied by 24%. These gains have outpaced major global indices such as Germany's DAX, France's CAC, Japan's Nikkei, and China's Shanghai Composite.

Both the Nasdaq and the S&P 500 reached record highs on Thursday, indicating strong demand for U.S. equities. This performance contradicts the narrative that capital flows are shifting away from the U.S. due to concerns over fiscal sustainability, trade wars, and criticism of the Federal Reserve. The data suggests that several key factors supporting U.S. exceptionalism remain intact and may even be strengthening. These factors include deregulation under the Trump administration, which has supported the U.S.'s productivity supercycle and its global leadership in economic growth.

Economic indicators such as real per capita GDP growth further validate the narrative of U.S. exceptionalism. This metric measures the rate at which the value of goods and services produced per person in an economy is adjusted for inflation. The U.S. significantly outperforms the EU in terms of real per capita GDP growth, indicating deeply structural reasons that support sustained exceptionalism. The U.S. jobs data released on Thursday added further evidence to this narrative, reinforcing the idea that U.S. exceptionalism is here to stay.

The resurgence of U.S. exceptionalism in the stock market can be seen as a positive development for bitcoin and the broader cryptocurrency market. Historically, there has been a positive correlation between U.S. stock market performance and bitcoin prices. Bitcoin has already risen by 44% to $108,000, rallying swiftly from the early April lows of nearly $75,000. With a pro-crypto administration in the White House, bitcoin can be viewed as part of the U.S. exceptionalism play.

Additionally, the return of U.S. exceptionalism could provide stability to the U.S. dollar. The strong jobs data released on Thursday further supports the narrative of U.S. economic strength, making the U.S. dollar an attractive asset. The European Central Bank (ECB) officials have expressed growing discomfort with the strong euro, indicating that the ECB may need to signal that too much strengthening in the euro could be an issue. This could lead to a counter-trend trade in favor of the U.S. dollar, as the ECB aims to avoid the euro overshooting levels above 1.20, which could complicate inflation targets.