• US policymakers will fight to direct any repatriation of global capital away from US assets. In other words, if Japan and other net-saver nations start bringing capital home, Washington will do what it can to make sure they liquidate non-US holdings first.
• Other countries will retaliate in kind. Each country will employ whatever leverage it has to protect its own markets. One of the most direct courses will be to “weaponize” domestic savings institutions by selling US assets and buying domestic assets. This “Mexican standoff” of asset sales will push bond yields up and stock prices down around the world.

There's an old military saying... The enemy gets a vote. Meaning that no matter how badly you're beating the other guy on the battlefield, no matter how much you would sue for peace if the situation were reversed, no matter how much you believe that you have a dominant strategy that constrains the other guy's choices, there is ALWAYS a range of choices for the other guy and you do NOT have the final say on what that choice might be.
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It can work for a while, this mirroring of your own raw preferences onto others, particularly if you start from a really strong position and can just steamroll the other players. But eventually you run into someone you can't steamroll. And they vote in a way that you weren't expecting. And then you lose.

​Wars don't become uncontrollable gradually. They become uncontrollable when one side crosses into a form of escalation that changes the structure of the conflict. That threshold is ground force entry. Ground war is different. It produces sustained exposure, longer timelines, and political and military commitments that are hard to unwind.

I think that the White House or the planning team was looking solely at oil flows. They may have looked at the US's relatively good supply balance, but they didn't look at products. They didn't look at the US requirement to import sulfur, for example. For the US to produce phosphate fertilizer, it has to process its own phosphate rock with sulfuric acid. Most — around half — of traded sulfur in the world goes through the Strait of Hormuz. It's a byproduct of refining very sulfurous, or "sour," crude. Sulfur wasn't being considered as a pain point in the past. Now it is. You need sulfuric acid in order to produce copper, steel, nickel, and many other products. Apart from fertilizer, you really need it to keep an industrial society running.

​retail investors are carrying an increasingly heavy load as the bull market stretches into its fourth year. Citing data from Citadel Securities, The Wall Street Journal relayed last week that the cohort accounted for 22% of domestic equity turnover in October, the highest share on record outside the February 2021 meme stonk revolution. That figure remained at or above 20% for the bulk of 2025, compared to a 10% baseline seen during the two years prior to the pandemic and about 15% during the 2022 selloff.

​Most estimates [for tax refunds] suggest that this will amount to an incremental 500 bucks across roughly 100mln filers which amounts to essentially a 50bln incremental injection into the economy. But since the vast majority of these measures are deductions and not credits, the refunds will be concentrated among higher income households who of course have lower spending propensity.

"More than 60% of respondents in a Bloomberg survey say officials are more likely to raise borrowing costs than lower them — a meaningful change from October, when only a third shared that outlook."

​There is a saying in America’s military that every boring, senseless rule was written in blood once. The same is true for the institutions of America’s money. They were all designed, one after the other, after something exciting happened.

​The Trump administration has treated not just the Fed, but all of them [regulatory agencies for finance] with disdain. Trump’s SEC has slowed enforcement actions, and abandoned cases. Trump advisers were reported to have considered absorbing the FDIC into the Treasury department in the transition to power. The administration has sought to close the CFPB. And now Trump has made clear his designs on the Fed, which doesn’t just set rates. It regulates banks. It distributes cash around the country. Its swap lines make the global dollar system possible.

​Carry trades make money when “nothing happens.” In other words, “they are financial transactions that produce a regular stream of income or accounting profits, but they subject the owner to the risk of a sudden loss when a particular event occurs or when underlying asset values change substantially.”

The carry regime results in a suppression of interest rate spreads that rests on an assumption that central banks—and other governmental or multilateral institutions such as the IMF—will not allow excessive exchange rate volatility or asset price volatility in general and will effectively stand behind debt. This means that credit risk is mispriced from a free market perspective. It implies that there is an understanding that debt is at least partly socialized; the costs of default or failure will be at least partly shared across the economy, potentially the global economy, as a whole.

CNN, in the field April 17–24, has Trump with a 41 percent job approval rating—down 7 percentage points over the last two months—and a 59 percent disapproval rating. Only 22 percent of respondents “strongly”  approve of his performance while 45 percent “strongly” disapprove.
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The numbers are pretty striking. And what’s also striking is that support for Trump’s performance on a wide range of issues has declined across the board. Obviously, he’s stronger on some issues than others—but on all of them, he’s trending down. This kind of broad disapproval is harder to reverse than if there were simply just one issue harming his presidency, on which he could presumably change course.

​he also believes that Trump—who has imposed sweeping 145 percent tariffs on nearly all Chinese imports, and who seems to announce or walk back some new trade policy at least once a week—is challenging that consensus in the most counterproductive way possible. 

​Analysts need to resist personal bias in their assessments. Trump detractors may mistakenly think that the President shares their conviction that he’s failing (he doesn’t) and give up on policies they don’t like (he won’t). Supporters may mistake objective market signals for partisan criticism, missing critical signals amidst the noise.

For example, in 2021, investors assumed interest rates would remain low. That assumption was based on past policy tendencies. However, those past policy tendencies were formed in a period of extremely low inflation. In the context of the higher inflation of 2021, there was no longer the luxury of keeping interest rates exceptionally low. Even in 2024, with rates much higher than in 2021, the Biden administration was constrained by the political reality of having to appear to be fighting inflation. What happened was a disaster for bond investors — all because the narrative about what could happen with long-term rates changed when inflation arrived.

​While the incoming president enjoys stronger standing with the American public than at almost any time during his first term, he also has a much more diverse political coalition to satisfy.
 
“I’m not sure that he will actually be stronger institutionally once he’s in office,” says Lindsay Chervinsky, a political historian and executive director of the George Washington Presidential Library. “There are so many issues that people [in his camp] are going to be fundamentally and intractably in disagreement on.”
 
There’s already clear faultlines,” he says “To continue to expand and grow, populism has to deliver results. And that doesn’t mean tax cuts for the wealthy, it means tax cuts for the little guy.” 

​How does the world view this event [Trump’s election]? In “Alone in a Trumpian World”, the European Council on Foreign Relations has just published the results of surveys of public opinion across the world. They are fascinating. The people most disturbed by Trump’s second coming are citizens of its closest allies. Only 22 per cent of citizens of the EU, 15 per cent of the British and 11 per cent of South Koreans think his return is a good thing for their country. Meanwhile, 84 per cent of Indians, 61 per cent of the people of Saudi Arabia, 49 per cent of Russians and 46 per cent of the Chinese think it is good for their country. 

​Japan’s $4 Trillion ‘Carry Trade’ Begins to Slowly Unwind
 
Japan’s investors are starting to lose their decades-long infatuation with overseas assets.
 
In the first eight months of the year, Japanese investors snapped up a net ¥28 trillion ($192 billion) of the nation’s government bonds, the largest amount for the time frame in at least 14 years. They also cut purchases of foreign bonds by almost half to just ¥7.7 trillion and their buying of overseas equities was less than ¥1 trillion.
 
“It’s going to be one of the mega trends and it is a super cycle for the next five to 10 years,” said Arif Husain, head of fixed-income at T. Rowe Price, who has nearly three decades of investing experience. “There will be a sustained, gradual but massive flow of capital back into Japan from abroad.”
 
With $4.4 trillion invested abroad, an amount larger than India’s economy, the speed and size of any pullback has the power to disrupt global markets. Even as the gap in rates between Japan and other countries has narrowed, the inflows have been a trickle rather than the flood some investors have feared.