A record amount of money has been flowing into the U.S. since Donald Trump was elected president.
The S&P 500 is reaching new highs, along with the Russell 2000, which tracks small-cap companies.
Not only did Republicans win the presidency, but they also secured control of Congress. This has led to expectations that it will be easier to implement tax cuts and tariffs, all these policies are good for businesses, which could mean bigger profits. Notably, Trump’s choice of Scott Bessent, a hedge fund manager, as Treasury Secretary has reassured markets. This appointment signals that business-friendly policies are likely, while also suggesting a cautious approach to imposing tariffs.
On the other hand, the rest of the world remains less optimistic about Trump’s presidency. The U.S. dollar is strengthening against major global currencies, including the euro, British pound, Japanese yen, Canadian dollar, Australian dollar, and Chinese yuan. This reflects a significant outflow of capital from these countries into the U.S. They call this movement “flight to safety.”
One of the key reasons for this shift is that other regions are perceived to be more vulnerable in the event of a trade war. In times of uncertainty, investors seek safe havens. While the U.S. may be at the center of global financial insecurity, it is also seen as a reliable refuge during turbulent times. The U.S. Dollar is considered a safe haven.
The U.S. economy was performing well even before Trump’s election, and it is likely to continue on this trajectory despite potential risks. Economic growth remains robust, and interest rates are declining.
The outlook suggests continued confidence in the U.S. stock market. While the world may appear stable on the surface, history has shown that investors often flock to the U.S. during periods of global insecurity. Personally, I have sold some of my Canadian securities in Canadian Dollars and bought U.S. securities in U.S. dollars.
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