Comment by Fade_Dance
4 days ago
The April meltdown was a great example of how markets react to net capital outflows from global investors. Interestingly enough, since the foreign buyer strike, money has been roaring back into US financial markets. I'll zip my mouth when it comes to judging their decision on that front, but I'll at least say that I suspect that the AI narrative has a strong pull, and much of the world really has no good option to participate in this apparently extremely intoxicating investing narrative other than to buy US tech. To be fair, the US has these sorts of narratives running more often than not, so we'll see how it plays out long term. As of now, talk of foreign money being pulled from the US was a flash in the pan.
You may of course be right. The reason I think you're probably (possibly?) not right is that it's nice to participate in this or that boom, but there's no point if you don't get to keep the profits.
I don't think "the market" has internalized how risky the US is becoming, and I think it'll take somewhere between a few more months and a few years for that to happen.
It's not just about chaotic dumbassness like tariffs. It's not just about disrupting the labor force for stupid reasons. It's not just about attempts to undermine the independent management of the monetary system. Those are bad, but worse is that the whole underlying system of institutions is being trashed. Random shakedowns are being normalized. Government (including courts!) is being deliberately packed with partisans and cronies.
For a really, really long time, the US has been a place where you could expect your counterparty to perform on a contract, and if they didn't you could expect the government to come to your aid, no matter who they were and even if you were a foreigner. You definitely didn't expect a "personal tax" on your company if you didn't suck up to the right people (or just because you happened to be handy). Oh, and you also didn't expect to be dealing with the kind of people a system like that selects for.
People just assume the US isn't run by gangsters, like they assume there'll be air the next time they breathe in. They're so used to that high trust that they don't even consciously factor the question into their decisions. It takes a long time for that kind of mental habit to change. It doesn't happen in a few weeks or a few months. But if US trustworthiness goes away (which it seems to be doing), and people figure it out (which they eventually will if it keeps up), then they're going to start assessing risk accordingly.
Admittedly some of the random stupidity and even more of the outright gangsterism seem to come from Trump personally. He's 79 and in theory he only gets 4 years regardless. But that doesn't mean that it all comes from him, and he and those around him are trashing institutions and norms really fast, in ways that are really hard to repair. It's a big gamble to assume that can or will be reversed by a successor, especially since the systems that are supposed to choose that successor seem to be being rigged to favor candidates with similar approaches. And it won't help you if you're out of business before then.