There is currently disagreement among Wall Street analysts over the correct strategy for dealing with U.S. dollar assets. Some, including Pimco Chief Investment Officer Dan Ivascyn, suggest Investors diversify away from U.S. stocks Because the Trump administration is so unpredictable. Analysts at ING have been pushing “sell america” The debate has been going on for some time, noting that the 9% devaluation of the U.S. dollar over the past 12 months has dealt a harsh blow to anyone buying U.S. assets during this period.
But we got some data yesterday that suggests the tide may be turning against the Selling America crowd.
First, the S&P 500 was up 0.26% yesterday and futures were up 0.36% this morning. Of course, a day’s trading itself is not important. But that means the S&P is up 1.45% year to date — a pretty good pace in such a short period of time.
More importantly, the U.S. government released the latest data Treasury International Capital Data (Covering November) They revealed that net foreign capital inflows into various assets in the United States were $212 billion.
ING’s Chris Turner says that’s a significant number.
“The main takeaway is that foreigners continue to pour money into U.S. asset markets. The data sets released by TIC are highly volatile, but looking at the rolling 12-month average, net monthly purchases of U.S. assets by foreign investors were about $100 billion in November and about $25 billion in the summer of 2024,” he told clients this morning.
Kathy Wood tweaks her ‘rolling recession’ theory
There are several other factors that give traders a favorable impression of the United States
Ark Investment Cathie Wood announced in a new comment Her theory of “rolling recessions,” in which various sectors of the economy suffer despite good overall economic conditions, may be coming to an end. The United States, she said, “has evolved into a coiled spring that can rebound strongly in the coming years.”
Wood is a unique investor, but she has a rabid fan base inspired by the performance of her ARK Innovation ETF, which is up 45% in the past 12 months, according to data Yahoo finance:
Tech bulls enthusiastic about fourth-quarter earnings
Her optimism seems tepid compared with Wedbush’s Dan Ives, who tells clients to ignore everyone with such abilities. Hate tech stocks lately.
“We believe technology stocks will have a very strong fourth-quarter earnings season, led by large-cap tech stocks as the backbone of cloud computing continues. Microsoft, letterand Amazon “Based on our fieldwork, demand from AI companies is very strong this quarter,” he said. “We believe… Wall Street still underestimates the size of the AI spending trajectory, and we expect Q4’s tech earnings to be another validation moment, with aggressive initial capital spending numbers doubling by 2026. Our optimistic view is that investors are still not fully aware of the upcoming wave of growth of $3 trillion in corporate and government spending over the next three years.”
One price indicator suggests he may be right: Copper prices are up 33% over the past 12 months (based on Comex rolling contracts). Of course, President Trump’s copper tariffs won’t help, but the fundamental issue is that tech companies building AI data centers need as much copper as possible, so copper prices look like an indicator of strong tech activity.
Trump: More smoke, less fire
Finally, investors have become accustomed to Trump’s political drama because they know that all the smoke often means no fire. Trump may have arrested Venezuelan dictator Nicolás Maduro, but he retained the rest of his regime. He may have threatened to bomb Iran again, but then failed to do so. His administration may be conducting a criminal investigation into Fed Chairman Jerome Powell, but then Powell spoke out against him while holding a gun in a video on Sunday Wall Street is convinced the Fed’s independence won’t disappear anytime soon. Even Trump threatens to invade Greenland Looks like it might end up in Pentagon’s ‘easier said than done’ document.
“De-dollarization will take some time”
ING’s Turner hasn’t given up on his theory that the world is slowly moving away from the dollar. But his report this morning acknowledged that the dollar is not dead yet. The dollar’s value relative to the foreign currency DXY index has risen by nearly a percentage point since the start of the year.
“The dollar is higher this week, which is probably the most pertinent macro move. U.S. data is stronger, such as retail sales and jobless claims, while the Fed’s Beige Book presents a view of moderate expansion of the economy, with no immediate threats to the job market,” he told clients.
“We again conclude that de-dollarization will take some time and if the dollar moves lower this year it will be driven by lower U.S. interest rates and increased foreign hedging of U.S. assets.”
Here’s a snapshot of the market ahead of the opening bell in New York this morning:
- S&P 500 Index Futures are up 0.36% this morning. It closed up 0.26% on the previous trading day.
- Stoxx Europe 600 Index Prices were unchanged in early trade.
- UK FTSE 100 Index Prices were unchanged in early trade.
- Japan’s Nikkei 225 Index down 0.32%.
- China CSI 300 down 0.41%.
- Korea Composite Stock Price Index up 0.9%.
- Indian NIFTY 50 up 0.16%.
- Bitcoin Down to $95,500.