Trillions of funds flowing! Mercer warns: Trump's policies are causing investors to flee the US market.

Mercer Consulting said that President Donald Trump's attempts to reshape the global trade landscape and pressure the Federal Reserve to lower interest rates is prompting investors to reduce their investments in the United States. The New York-based investment consulting company's global chief investment officer Hooman Kaveh stated that the company manages 3,900 clients with assets totaling $17 trillion, and these clients are moving funds from the United States to Europe, Japan, and other regions. He mentioned that the reasons for the capital outflow are concerns about tariffs, Trump pressuring the Fed, rising deficits, and a weakening dollar. In an interview this week, Kaveh stated that the beginning of Trump's second term has become a "tipping point for diversified investments." He said, "We are indeed seeing this in our clients' portfolios, with funds flowing into diversified markets, regions, asset classes, and currencies." In early April, the uncertainty of Trump's trade war caused global market panic, leading to a simultaneous drop in U.S. stock prices and U.S. Treasury prices after his "Liberation Day" announcement. Although both have since rebounded, the performance of the U.S. stock market this year has lagged behind most global stock markets for U.S. dollar investors. U.S. stocks lag behind other global stock markets Challenges of tariffs Kaveh stated that tariffs pose an immeasurable challenge to the market, as they may weaken the profit margin of companies, or they may be passed on and trigger inflation. He said, "If tariffs push up prices, and a weak dollar could exacerbate inflation, then the Fed's interest rate cuts will face greater challenges." He added that the broad support of the Trump administration for the devaluation of the dollar is a "fatal weakness of the current strategy" as it could worsen the inflation triggered by tariffs. The Bloomberg Dollar Spot Index nears its lowest point in three years Kaveh stated that Trump's frequent criticism of Fed Chair Jerome Powell for being slow to act on interest rates, and attempts to dismiss Fed Governor Lael Brainard, are pushing investors to withdraw from U.S. assets. He said, "The politicization of the Fed is putting the Fed in a disadvantageous position. Focus on inflation and employment is becoming increasingly blurry. This is not good news. However, it certainly advocates for diversified investments." Kaveh mentioned that Mercer's clients are planning to increase investments in European and Japanese stocks, which still have attractive valuations compared to U.S. stocks. Clients are also considering investing in private markets, such as the venture capital sector related to the artificial intelligence boom. He said, "Most of our clients seem to believe that artificial intelligence will be a significant driver of the macro environment in the next five to ten years."