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12 hours ago
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This overlooked risk to financial markets usually lurks quietly under the surface. But now it's ‘shouting, not whispering'
Much attention has been focused on the U.S. current account deficit, or the imbalance between imports and export, but there's another metric that's poised to amplify market shocks. That's the net international investment position, according to Kevin Ford, FX and macro strategist at Convera, who likens it to America's financial scorecard with the rest of the world. President Donald Trump's trade war has focused much of Wall Street's attention on the U.S. current account deficit, or the imbalance between imports and exports. But there's another metric worth following that could worsen financial risks. According to Kevin Ford, FX and macro strategist at Convera, the country's net international investment position (NIIP) often gets overlooked. It measures how much the U.S. owns abroad versus how much the world owns in the U.S., he said in a note last week, describing it as America's financial scorecard with the rest of the world. And by that score, the U.S. is in the red by about $26 trillion, or nearly 80% of GDP. 'That means foreign investors hold way more American assets than Americans hold abroad,' Ford added. 'It's a setup that works fine when confidence is high, but in shaky times like 2025, it can become a pressure cooker.' Indeed, times have been shaky. The U.S. Dollar Index is down 10% so far this year as the shock of Trump's 'Liberation Day' tariffs continues to reverberate, creating doubts about U.S. assets once deemed reliable safe havens. In fact, the dollar's year-to-date plunge is the worst since the U.S. transitioned to a free-floating exchange rate in 1973, effectively ending the post-World War II system of fixed rates under the Bretton Woods agreement. Meanwhile, legislation that would add trillions of dollars to fiscal deficits is advancing in Congress, stirring more anxiety among foreign investors, especially those who hold U.S. debt. Put it all together, and this year has been a textbook example of how a negative NIIP profile can magnify currency turmoil, Ford warned. 'And because so much of the capital propping up the U.S. financial system comes from abroad, even small shifts in sentiment can lead to big outflows,' he added. 'That's a lot of dollars being sold, and fewer being bought, and voilà, the greenback stumbles.' Circling back to the financial scorecard analogy, Ford explained that the problem with focusing on the current account deficit is that it only shows the flow of transactions, i.e. imports versus exports. By contrast, the NIIP shows the overall pile of debts—and ignoring that would be like judging a person's spending habits without checking their credit card balance, he said, making trust 'your most important asset.' 'Yes, trade deficits, interest rates, and Fed signals all play a role, but the NIIP tells you just how exposed the U.S. is when things go sideways,' Ford concluded. 'It's the quiet structural risk lurking under the surface, ready to amplify shocks. And in a year like this, it's been shouting, not whispering.' Waning confidence in the dollar has spurred investors and central banks around the world to load up on gold, which has soared in price in recent years and particularly this year, surging 21% in 2025. Trump's unrelenting pressure on Federal Reserve Chairman Jerome Powell to cut interest rates has also weakened the dollar lately. While many on Wall Street see even more downside potential ahead for the dollar, the AI boom that's still drawing billions in global investment flows to the U.S. offers some hope for relief. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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2 days ago
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Euro Poised for Best Run Since 2017 as Traders Target $1.20
(Bloomberg) -- The euro is set for its longest stretch of monthly gains in eight years, boosted by rising confidence in Europe's economic prospects and a hunt for alternatives to the dollar. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares US Renters Face Storm of Rising Costs Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Mapping the Architectural History of New York's Chinatown US State Budget Wounds Intensify From Trump, DOGE Policy Shifts The common currency is up more than 3% in June, its sixth month of advances and the best stretch since 2017. It climbed to $1.1744 this week, the highest level since September 2021. Key to the euro's gains are bets that the Federal Reserve is only starting its interest-rate cuts while the European Central Bank is coming to the end of its easing run. While European governments are readying tens of billions of euros of extra spending, US economic data is coming in soft. Wagers on long-term dollar weakness are also getting support from speculation the next Fed chair will heed President Donald Trump's calls for aggressive rate cuts. 'The fleeting support for the greenback, born of geopolitical tensions and its traditional safe-haven appeal, has all but evaporated,' said Antonio Ruggiero, strategist at foreign exchange and global payments firm, Convera. 'The euro will continue to benefit from persistent dollar pessimism.' Concern Trump's trade policies could tip the nation into recession have dealt a blow to the dollar's safe-haven image. European policymakers have called for steps to boost the euro's global standing amid the shifting landscape. Treasuries Rally, Dollar Slumps as Trump Eyes Powell Successor Options traders have wasted no time leaning into the latest burst of strength. Volumes on Thursday surged to the fifth-highest on record, according to Depository Trust & Clearing Corporation data compiled by Bloomberg. Roughly one in four bullish euro options this week targeted a move to $1.20 or higher, while options sentiment posted the ninth-most bullish repricing since at least 2005. Full Steam Ahead Trading volume in the euro exceeded €63 billion ($73.8 billion) on Thursday, more than quadruple the volumes seen for the yen and five times the volumes for the Canadian dollar. The euro was up 0.2% at $1.1722 as of 8:10 a.m. in London. 'It's full steam ahead for euro bulls,' said Shoki Omori, chief strategist at Mizuho Securities Co. in Tokyo. 'We're seeing that reflected in options markets.' This week, the euro cleared a key options hurdle at $1.17 as tensions in the Middle East receded and expectations the Fed will need to push on with rate cuts intensified. Money markets are pricing in 61 basis points of Fed easing by year-end, compared with just 25 basis points from the European Central Bank. Traders will be looking to clues on rates from ECB President Christine Lagarde when she speaks next week at the central bank's annual Sintra forum. Not everyone is convinced the euro's six-month charge will continue. According to Francesco Pesole, strategist at ING Groep NV in London, fresh catalysts are needed for the common currency to test its next milestone. 'Something needs to happen on tariffs, Treasuries or the Fed, for a run to $1.20,' Pesole said. What Bloomberg Strategists Say... 'European currencies are best placed to transform the dollar's weakness into strength given that the Bank of Japan is dragging its feet on further policy tightening. Even so, the euro's journey higher will be far from linear.' — Ven Ram, Markets Live strategist. Click here for the full piece. Still, data showing how investors are positioning suggest there's reason for the market to be confident about further gains. Asset managers are the most bullish on the common currency since early 2024, Commodity Futures Trading Commission statistics show. Hedge funds are also the least bearish on the euro since April. With the ECB nearing the end of its easing cycle, 'portfolio flows and reserve diversification out of the dollar may favor alternative reserve currencies such as the euro,' Oversea-Chinese Banking Corp. strategists including Frances Cheung and Christopher Wong wrote in a note. --With assistance from Mark Cranfield. (Updates throughout.) America's Top Consumer-Sentiment Economist Is Worried How to Steal a House Inside Gap's Last-Ditch, Tariff-Addled Turnaround Push Apple Test-Drives Big-Screen Movie Strategy With F1 Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags ©2025 Bloomberg L.P.
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6 days ago
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Trump's threat of ‘regime change' in Iran is being greeted with calm and enthusiasm by the markets
Despite President Trump's threat of 'regime change' in Tehran following U.S. strikes on Iranian nuclear sites, the markets have reacted with calm and even optimism. Oil prices, after a brief spike, returned to pre-strike levels, and volatility indices dropped, while equities edged higher. Investors are unconcerned about major oil disruptions, reasoning that Iran is unlikely to close the Strait of Hormuz and harm its own economy. You'd think the price of oil would be heading toward $100 per barrel right now—but it's not. Donald Trump threatened 'regime change' in Iran early this morning and, counterintuitively, the price of oil declined back to roughly where it was ($76/barrel) prior to the U.S. bombing of Iran's nuclear facilities. Sure, there was a brief spike in the price to $79. But the decline happened despite Iran's threat to close the Strait of Hormuz, the shipping bottleneck in the Persian Gulf through which 20% of the world's oil flows. The VIX volatility index—the so-called 'fear index'—was down 6% this morning and S&P 500 futures rose 0.22%. Because Iran's options in terms of screwing up the oil market are actually quite limited. First, if Iran closed the Strait, the country it would hurt the most would be itself. Iran needs oil revenues as much as the rest of the world needs Iranian oil. And the U.S. would barely feel the closure of the Strait because it buys very little oil from the Gulf region. The predominant buyer of Iranian oil is China, which is an ally of Tehran … so you can see why investors don't think that Iran is going to shoot itself in that particular foot, and why Iran has not actually closed the Strait yet. Historically, it would be extremely unlikely for Iran to actually block the shipping route. The Iranian regime has never done that in its five-decades of existence, according to Convera's George Vessey. And if it did so, it would strengthen the U.S. dollar—which has been through a weak spot of late. (Oil contracts are settled in dollars so if the price rises the demand for dollars increases likewise.) 'In the lead-up to the strikes, markets were pricing in diplomatic progress: the euro strengthened, the dollar softened, safe havens were muted, and oil dropped nearly 3% on Friday — signaling a partial return to the pre-conflict playbook. But the U.S. intervention has now reversed that momentum. While the broader bias still leans toward structural dollar weakness, escalating Middle East tensions are injecting support for the greenback via the commodity channel. … As such, even the threat alone is enough to keep the dollar bid, with positioning set to adjust as investors begin to unwind their bearish USD bets,' Vessey told clients. Elsewhere, investors are beginning to suspect that Saturday's bombing looks more like the closure of a period of uncertainty rather than the beginning. The current situation is that Iran's air capability is gone, its nuclear weapons program is at the very least heavily damaged, it has a limited ability to punish the world with higher oil prices, its terrorist proxies Hamas and Hezbollah are in tatters, and its military's initial retaliation against further bombing by Israel overnight consisted of just one—one!—missile. 'A weakened Iran with no nuclear capacity removes the biggest threat to the Middle East and Israel which will be viewed as a positive for the market and tech stocks in particular as investors digest this news,' Wedbush's Daniel Ives and team told their clients this morning. 'The market will view this Iran threat as now gone and that is a positive for growth in the broader Middle East and ultimately the tech sector. It will take some time for this conflict to settle, but the market will view the worst is now in the rearview mirror with investors looking forward.' There could be an 'estimated geopolitical risk premium of $12' on each barrel, according to Goldman Sachs. 'We consider [there might be] two types of oil disruption scenarios, not in our base case: 1) reductions in Iran supply only ($80 Brent), and 2) broader disruption of regional oil production or shipping ($110 Brent),' analysts Sahar Islam and Ayushi Mishra wrote in a note seen by Fortune. The S&P 500 closed at 5,967.84 on Friday, it's up 1.47% YTD. This morning, S&P futures were up 0.22% after the price of oil briefly spiked over $79 per barrel and then declined back to just over $76. The VIX volatility index was down 6% this morning. The Stoxx Europe 600 and the U.K.'s FTSE 100 were both flat in early trading. Bitcoin is back over $101K after hitting a low around $98K. China and Hong Kong were broadly up this morning. Japan, South Korea, and India all saw declines. This story was originally featured on
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19-06-2025
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Trump's decision on whether to bomb Iran could have knock-on effects for his fight against the Fed
With the Fed's interest rate decision out of the way and a national holiday for the U.S. stock markets, investors are turning their attention to whether President Trump will bomb Iran. Stocks were largely down in Asia and Europe this morning, following a decline in the S&P 500 yesterday. The human cost of global conflict is unbearable for the victims, of course, and it comes with an economic cost too, which analysts are trying to estimate right now. President Trump has reportedly approved a plan to bomb Iran but not yet given the green light for action. The main issue for investors is what the Iran conflict might do to the price of oil and how that will affect the strength of the dollar. That, in turn, will likely influence the U.S. Federal Reserve's future decisions on whether or not to cut interest rates. Trump, of course, wants Fed Chair Jerome Powell to lower interest rates. He insulted Powell early this morning on Truth Social to underline that point: 'Too Late—Powell is the WORST. A real dummy, who's costing America $Billions!' One possible outcome is that if Trump decides to bomb Iran and the conflict produces a prolonged disruption to the supply of oil, that might strengthen the dollar while damaging the global economy. (Oil markets are settled in dollars, and rising oil prices would thus trigger greater demand for U.S. currency.) Those two factors—economic weakness but dollar strength—could push the Fed to make the interest rate cuts that Trump wants. Convera's Antonio Ruggiero sent a note to clients on the dollar issue this morning: 'Rising geopolitical tensions in the Middle East this week lent support to the greenback, with the DXY briefly pushing above 98.800 on Tuesday before paring gains. Behind the façade of safe-haven appeal lies the true driver of the dollar's rebound: rising oil prices, now hovering near a five-month high. Since most global oil trades are settled in U.S. dollars, surging crude demand tends to drive additional demand for USD. This rebound in sentiment is also reflected in the options market, where—for the first time since April—traders have backed off from bearish dollar positions. Escalating tensions could amplify this further.' At JPMorgan, Joseph Lupton and Bruce Kasman published a note that argued: 'The rise in risk premia associated with the Mideast war, if sustained, is already sufficient to fully offset the cushion provided by the oil supply increase [from Saudi Arabia]. This leaves a net drag on global GDP growth of 0.6% this year. Concentrated in the second half, this drag should lower 2H25 global GDP growth by more than 1% at an annualized pace,' they said. 'A full curtailment of Iranian oil exports (1.8mbd) would, according to our model, lift oil prices to near $100/bbl and, if sustained, reduce global GDP by a full %-point (or, more likely, 2%-point annualized in 2H25), threatening a global recession,' they said. The Fed, as always, is waiting for more data and less uncertainty. The uncertainty of war won't help, according to Daiwa Capital Markets: 'The Trump administration has yet to take a definitive stance on intervention in the Iran-Israel conflict–with the plotted course either facilitating a return to calm or potentially triggering a broader conflict that could disrupt energy markets. Thus, uncertainty remains high and officials have demonstrated that they are willing to wait for additional clarity,' Lawrence Werther and Brendan Stuart told their clients in a note seen by Fortune. Here's a snapshot of the action across global markets this morning: South Korea's Kospi was up 0.19%. India's Nifty 50 was flat. The S&P 500 closed flat yesterday. The market is closed for the Juneteenth holiday today. The U.K.'s FTSE 100 slipped 0.3% in early trading. China's Composite was down 0.82%. Japan's Nikkei 225 was down 1%. Hong Kong's Hang Seng was down 2%. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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17-06-2025
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Cushman & Wakefield's Michelle MacKay on the advantages of board-to-CEO leaders
In today's CEO Daily: Diane Brady talks to Cushman & Wakefield's Michelle MacKay. The big story: Trump may or may not be trying to get a ceasefire in Iran. The markets: Resting easy. Analyst notes from Convera on the weakening dollar, Macquarie on Iran and the oil market, and Oxford Economics on business sentiment Plus: All the news and watercooler chat from Fortune. Good morning. Cushman & Wakefield's Michelle MacKay, Larry Culp of GE, Richard Dickson of The Gap, and Carol Tomé of UPS all have something in common: They were appointed CEO after serving on the boards of companies they now run. Such board-to-CEO transitions have become more common for multiple reasons, from the complexity of the business landscape to a desire for boards to instil seasoned leaders they know and trust. For MacKay, serving on three public boards after retirement stoked her ambitions to take on a CEO role. 'Those three years that I spent in board seats, with a little more time for myself, were probably the most important years of my career journey, which is ironic, because I wasn't working full time,' MacKay told Fortune in this week's Leadership Next podcast. 'I really hadn't stepped back in a number of years and reconsidered my own path.' Her background in finance and real estate were appealing at a time of declining revenues. When Cushman's then-CEO John Forrester asked MacKay if she'd consider becoming CFO of the company, she said no, instead agreeing to become COO in 2020 with a clear path to becoming CEO in July of 2023. 'It was a big challenge with a big brand and I had somebody who backed me from the onset. And I thought, 'You know what? We got one version here, one life. I'm just going to go for it.'' While tariffs, geopolitics and other issues continue to weigh on the global outlook for commercial real estate services, MacKay has led the firm to growth again. Board service gave her a holistic view of not only the company but also her career. With CEO turnover near record highs for much of the past year, more leaders may find a period of pause on boards inspires them to return to corporate leadership with fresh eyes and purpose. Said MacKay: 'Can one be too engaged? I don't think so.' You can listen to the podcast here on Apple or Spotify. More news CEO Daily via Diane Brady at This story was originally featured on
