Global Investors Reassess Confidence in U.S. Assets

Global Investors Reassess Confidence in U.S. Assets

Why in the News ?

In the first 100 days of Donald Trump’s presidency, market volatility, trade tensions, and criticism of the Fed have led some global investors to diversify away from U.S. assets, raising concerns about a potential long-term shift.

Market Reactions to Trump’s First 100 Days:

• S&P 500 dropped ~8%, dollar index fell 9%.
• Concerns rose due to trade rhetoric, Fed criticism, and inconsistent policy signals.
• Equities briefly rebounded after moderation in trade talk.
• Citadel’s CEO warned that undermining U.S. credibility damages its global brand.

Signs of Shifting Investment Patterns

• Goldman Sachs: ~$60 billion in U.S. stock sell-off since March, mainly by Europeans.
• Oxford Economics noted a “broader shift” out of U.S. assets.
• S. dollar’s share in global forex reserves declined from 66% (2014) to 57.8% (2024).
• Some central banks may speed up de-dollarization due to geopolitical tensions.

Diverging Investor Views on the Dollar’s Future

• Hedge funds like Tolou Capital increasing gold, reducing Treasuries, citing “crisis of confidence.”
• Ultra-rich clients seeking financial diversification outside U.S. (APEX Capital Partners).
• Barclays and others suggest the sell-off may just be market rebalancing.
• Some experts still believe in long-term U.S. economic strength due to deregulation and innovation.