Foreign investors have shown increasing reluctance toward U.S. equities, pulling a staggering $6.5 billion in just one week, according to Bank of America Global Research.
This marks the second-largest outflow on record, only behind the $7.5 billion in outflows during the 2023 banking crisis.
The surge in capital flight highlights ongoing concerns about trade tensions and tariff-related volatility, shaking confidence in U.S. markets.
The foreign pullback is significant: investors now hold 20% of the U.S. equity market, totaling $18.5 trillion, 30% of U.S. treasuries ($7.2 trillion), and 30% of corporate debt ($4.2 trillion), according to data from The Kobeissi Letter.
The fear of further market disruptions appears to have triggered this retreat, with many seeking safer alternatives elsewhere.
Peter Schiff, a staunch critic of President Trump’s tariff policies, took a swipe at the former president’s approach, claiming, “Trump thought tariffs would bring capital into America. Instead, it triggered a global run out of U.S. assets.”
Schiff’s criticism paints a picture of irony — where protectionist measures aimed at strengthening U.S. markets have, instead, spurred the opposite reaction.
He added in a video that “whenever the government wants to do something, the opposite is what happens,” emphasizing his long-standing skepticism of government intervention.
The situation has raised alarms among analysts, who warn of a potential simultaneous collapse across U.S. assets, with equities, treasuries, and even the dollar all weakening at once.
The broader market turmoil suggests that foreign investors may be losing faith in the stability of American financial assets.
This retreat has caused ripples throughout the business world, underscoring the challenges of balancing global investment flows with domestic policy.
However, not all market watchers share this pessimistic outlook. Tom Lee of Fundstrat Global Advisors counters the “America in decline” narrative, stating that the best and most important companies in the world remain American.
For him, American exceptionalism isn’t fading — it’s evolving, even amidst global economic challenges.
In the ever-volatile world of global markets, one thing is clear: the tug-of-war over tariffs and foreign investment is far from over, and the future of U.S. assets remains uncertain.
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