May 29, 2025 • 8 mins
Bloomberg News Chief Correspondent for Global Macro Markets Liz McCormick explains why Asian investors are rethinking their strategy of investing in US assets. The trend has been driven by concerns over the US budget deficit, political polarization, and the impact of Trump's policies on the dollar.
The shift away from US assets could lead to a significant unwinding of dollar investments, with potential beneficiaries including emerging markets, Europe, and Japan, and a possible appreciation of Asian currencies.
This story is the subject of the latest Bloomberg Big Take. You can read the full story, and more from Bloomberg The Big Take on the Bloomberg Terminal and at Bloomberg.com/bigtake.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. You're listening to Bloomberg
Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:14):
For decades, Asia's export powerhouses had a simple financial strategy basically,
sell goods to the United States, then invest the proceeds
in American assets. That model, though, is facing a really
big threat. In fact, as our team rights, the biggest
threat since the eight financial crisis, with potentially big implications
for US dollar based investments. So we're talking about again
(00:35):
this question, this subject is the US uninvestable too?
Speaker 1 (00:39):
With us, we've got Liz kapl McCormick. She joins us
with some additional insights into this story. It is the
big take in one of most read stories on the
Bloomberg terminal. She joins us from New Jersey list seven
and a half trillion dollars in investments come from Asia
into the US. That's pretty sizable. Contextualize that for US.
Speaker 3 (00:58):
Yeah, absolutely nothing.
Speaker 4 (01:00):
And like you're mentioning, Ruth Carson and the team in
Asia wrote this great, big take on You know what
I think is great that they laid out too, is
this was kind of a shift.
Speaker 3 (01:09):
That was slowly in motion.
Speaker 4 (01:11):
Right, But that has gotten this rocket fuel with the
new administration in the US and the policies like they
lay out, and there aren't tim like you pointed out,
they said trillions over seven trillion.
Speaker 3 (01:22):
I mean that's a lot of money for a while,
even like some.
Speaker 4 (01:25):
People you know us think, oh, I'm to US centric
because it seemed like the US you couldn't lose, right,
like they were saying for these Asian nations they were
exporting and taking all those dollars.
Speaker 3 (01:35):
Putting him in US assets and it was a.
Speaker 4 (01:37):
Winner, the dollar strengthening. US stocks were outperforming everything. And
now there's kind of like a not so much, right,
Maybe we should rethink this strategy which is happening as
we speak, like they laid out in the story.
Speaker 2 (01:50):
Liz, Even before Donald Trump's second presidency, capital flows from Asia,
as the story points out, capital flows from Asia to
the United States were off there historic peak. So what's
different about kind of what we're seeing more recently? Like
why are we having this conversation? Why does it seem
to be more urgent and more serious?
Speaker 4 (02:12):
Well, I think because the administration, even President Trump in
his first term, this wasn't such a top of mind,
not that it wasn't part of things, but it seems
like in this rethink, we know he wants to bring
a lot of manufacturing back. He's very focused on trade.
They've talked even though the Treasury Secretary said they still
have a strong dollar policy, but there's been a lot
(02:35):
of papers and their team and work on that.
Speaker 3 (02:37):
You know, maybe the dollar's been too strong.
Speaker 4 (02:39):
Right, and some of these nations they've alluded to are
kind of using or had been using a weak currency
as a way to help boost their exports.
Speaker 3 (02:47):
So I think, Carol, that's why we're talking about it
because it's been so clear.
Speaker 4 (02:51):
It's been out there in the trade policies, which I
know are kind of unfolding all the time. But so
you're just seeing how can you not you know, be
affected when you see dollar down and that was supposed
to be the Trump trade, strong dollars, right, and that
has been tumbling all year, so people, you know, the
Asian currencies have been rallying, so you kind of can't
not adjust to this.
Speaker 3 (03:10):
Like they talk about some of the insurance companies that
got hurt.
Speaker 4 (03:13):
From big moves in the Taiwanese dollar and other things
that it just been so outsized. So I just think
that's why it's just just so much more important now.
And what I think is important is like, are ever,
let's say, Ever smart.
Speaker 3 (03:27):
Are We like to talk to him a lot. Steven
Jen talked about like we're only seeing the tip of
the iceberg.
Speaker 4 (03:31):
There's more trillions to move, so that you kind of
have to factor into your investment portfolios.
Speaker 1 (03:37):
If you think about the flows from the perspective of
winners and losers and the situations such as this, what
are the economies that are poised to be beneficiaries if
we indeed see assets from outside of the United States
that typically would flow into the US move somewhere else.
Speaker 4 (03:53):
Yeah, a lot of Yeah, a lot of the emerging
nations are doing well. Their currencies have been appreciation, they appreciating,
they've been getting in flows even like in general, like
you're seeing more folks say, well, maybe I should allocate
more to European investments right anywhere.
Speaker 3 (04:09):
That's kind of non us because I won't get into.
Speaker 4 (04:12):
Like some of the stuff that people are now digging
into the weeds of this big beautiful bill and seeing
things that they're saying, does this support what you're talking about?
Speaker 3 (04:19):
And what the big take is talking about that there
is kind of a.
Speaker 4 (04:24):
Focus on the administration for a week or dollar and
things that will make other nations do better. You know
that maybe if you get this, I'm remembering my days
and I don't remember much of graduate school and like
the twin deficits, you know how you know, my professor,
professor Langdan, we'll talk about how trade deficit is linked
to the you know, the capital accounts. So you know,
we get we're a trade deficit, but we got this
(04:45):
money flowing in, so we're kind of upending that. We
want less of a trade deficit. So you have to
kind of figure the flow is going to be more
of the money. The capital flow is going to go
away as well, and we're starting to see that.
Speaker 2 (04:56):
What does that mean in terms of our US financial markets?
In terms of the US you know, we've often been
so washed I feel like, in money for investing, for
building out, for building up. So what are the implications
potentially or will there still be plenty coming into the
US and the US markets that it'll be okay, just different.
Speaker 4 (05:18):
Yeah, now I have to give a nod or people
will kind of holler at me because there.
Speaker 3 (05:21):
Are some people who say list, I'll look at it.
Speaker 4 (05:23):
It's not that bad because today we had a really
good auction. We had a five year note auction. So
there's a lot of focus. Is there going to be
a buyer strike on US? Dead Treasure Secretary Beson on
our TV on Friday talked about his data shows, you know, foreign.
Speaker 3 (05:37):
Demand has actually been good and even better in some
of the auctions.
Speaker 4 (05:40):
So I think in the FED minutes which I read
through quickly, they talked about they haven't seen data yet
of kind of an investor outflow, So I think for
now we're not.
Speaker 3 (05:51):
I mean, look at long term meals. So that's a
whole nother story.
Speaker 4 (05:54):
So there there's a lot of factors in that. But
I don't think we're seeing a total buyer strike on
the US debt market. There's more of the fiscal concerns
looming and maybe less reasons why foreigners may want to invest.
We're just not seeing massive selling as of yet. But
I do think you have to just say you can't
count on like someone was saying, we really have to
look at domestic investors even in you know what you're
(06:17):
talking about from companies, there's maybe less money flowing in
from abroad, because if you're not hedging those investments, when
you take those dollars back, if the dollar keeps weakening,
you're taking you're repatriating less. Right, that has to be
a concern. So I think that's why there's a rethink
going on.
Speaker 1 (06:32):
Is there something to be read into here about just
the idea that during this administration there is this America
First agenda at least when it comes to manufacturing, when
it comes to national security. Can we read into that
when it comes to financial markets too, that potentially the
politics of this just show that the world is becoming
(06:55):
less interconnected and when it comes to financial markets as well.
Or is that not actually happening.
Speaker 4 (07:04):
Well, like I said, some of the data doesn't show
massive outflow yet. But and some folks, you know, even
officials I won't name names, say oh, that's not going
to happen. But I don't think tim, you can preclude
that from happening, because you know, it's just like we said,
that trend that's been going on for a while. Even diversify,
you know, like foreign currency holdings, people want to have
(07:24):
a little bit less than dollars.
Speaker 3 (07:26):
That has picked up a pace. So I do think
you don't have to worry about like, oh right now.
I don't think the.
Speaker 4 (07:32):
Massive volatility we're seeing, and we're seeing a lot in
debt markets and inequity markets in the US, I think
that's more driven by the on again, off again changes
in trade policy.
Speaker 3 (07:42):
The bill moving through Congress.
Speaker 4 (07:44):
What people think it's outlook is for the trajectory of
the debt and deficit.
Speaker 3 (07:48):
But it's kind of like this slow current moving that
the money.
Speaker 4 (07:53):
You're going to see less foreign money flowing into this country.
I think, slowly, slowly picking up a pace.
Speaker 2 (07:58):
All right, Good to check in with you, always, always,
Lis McCormick
Bloomberg Audio Studios, Podcasts, radio news. You're listening to Bloomberg
Business Week with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:14):
For decades, Asia's export powerhouses had a simple financial strategy basically,
sell goods to the United States, then invest the proceeds
in American assets. That model, though, is facing a really
big threat. In fact, as our team rights, the biggest
threat since the eight financial crisis, with potentially big implications
for US dollar based investments. So we're talking about again
(00:35):
this question, this subject is the US uninvestable too?
Speaker 1 (00:39):
With us, we've got Liz kapl McCormick. She joins us
with some additional insights into this story. It is the
big take in one of most read stories on the
Bloomberg terminal. She joins us from New Jersey list seven
and a half trillion dollars in investments come from Asia
into the US. That's pretty sizable. Contextualize that for US.
Speaker 3 (00:58):
Yeah, absolutely nothing.
Speaker 4 (01:00):
And like you're mentioning, Ruth Carson and the team in
Asia wrote this great, big take on You know what
I think is great that they laid out too, is
this was kind of a shift.
Speaker 3 (01:09):
That was slowly in motion.
Speaker 4 (01:11):
Right, But that has gotten this rocket fuel with the
new administration in the US and the policies like they
lay out, and there aren't tim like you pointed out,
they said trillions over seven trillion.
Speaker 3 (01:22):
I mean that's a lot of money for a while,
even like some.
Speaker 4 (01:25):
People you know us think, oh, I'm to US centric
because it seemed like the US you couldn't lose, right,
like they were saying for these Asian nations they were
exporting and taking all those dollars.
Speaker 3 (01:35):
Putting him in US assets and it was a.
Speaker 4 (01:37):
Winner, the dollar strengthening. US stocks were outperforming everything. And
now there's kind of like a not so much, right,
Maybe we should rethink this strategy which is happening as
we speak, like they laid out in the story.
Speaker 2 (01:50):
Liz, Even before Donald Trump's second presidency, capital flows from Asia,
as the story points out, capital flows from Asia to
the United States were off there historic peak. So what's
different about kind of what we're seeing more recently? Like
why are we having this conversation? Why does it seem
to be more urgent and more serious?
Speaker 4 (02:12):
Well, I think because the administration, even President Trump in
his first term, this wasn't such a top of mind,
not that it wasn't part of things, but it seems
like in this rethink, we know he wants to bring
a lot of manufacturing back. He's very focused on trade.
They've talked even though the Treasury Secretary said they still
have a strong dollar policy, but there's been a lot
(02:35):
of papers and their team and work on that.
Speaker 3 (02:37):
You know, maybe the dollar's been too strong.
Speaker 4 (02:39):
Right, and some of these nations they've alluded to are
kind of using or had been using a weak currency
as a way to help boost their exports.
Speaker 3 (02:47):
So I think, Carol, that's why we're talking about it
because it's been so clear.
Speaker 4 (02:51):
It's been out there in the trade policies, which I
know are kind of unfolding all the time. But so
you're just seeing how can you not you know, be
affected when you see dollar down and that was supposed
to be the Trump trade, strong dollars, right, and that
has been tumbling all year, so people, you know, the
Asian currencies have been rallying, so you kind of can't
not adjust to this.
Speaker 3 (03:10):
Like they talk about some of the insurance companies that
got hurt.
Speaker 4 (03:13):
From big moves in the Taiwanese dollar and other things
that it just been so outsized. So I just think
that's why it's just just so much more important now.
And what I think is important is like, are ever,
let's say, Ever smart.
Speaker 3 (03:27):
Are We like to talk to him a lot. Steven
Jen talked about like we're only seeing the tip of
the iceberg.
Speaker 4 (03:31):
There's more trillions to move, so that you kind of
have to factor into your investment portfolios.
Speaker 1 (03:37):
If you think about the flows from the perspective of
winners and losers and the situations such as this, what
are the economies that are poised to be beneficiaries if
we indeed see assets from outside of the United States
that typically would flow into the US move somewhere else.
Speaker 4 (03:53):
Yeah, a lot of Yeah, a lot of the emerging
nations are doing well. Their currencies have been appreciation, they appreciating,
they've been getting in flows even like in general, like
you're seeing more folks say, well, maybe I should allocate
more to European investments right anywhere.
Speaker 3 (04:09):
That's kind of non us because I won't get into.
Speaker 4 (04:12):
Like some of the stuff that people are now digging
into the weeds of this big beautiful bill and seeing
things that they're saying, does this support what you're talking about?
Speaker 3 (04:19):
And what the big take is talking about that there
is kind of a.
Speaker 4 (04:24):
Focus on the administration for a week or dollar and
things that will make other nations do better. You know
that maybe if you get this, I'm remembering my days
and I don't remember much of graduate school and like
the twin deficits, you know how you know, my professor,
professor Langdan, we'll talk about how trade deficit is linked
to the you know, the capital accounts. So you know,
we get we're a trade deficit, but we got this
(04:45):
money flowing in, so we're kind of upending that. We
want less of a trade deficit. So you have to
kind of figure the flow is going to be more
of the money. The capital flow is going to go
away as well, and we're starting to see that.
Speaker 2 (04:56):
What does that mean in terms of our US financial markets?
In terms of the US you know, we've often been
so washed I feel like, in money for investing, for
building out, for building up. So what are the implications
potentially or will there still be plenty coming into the
US and the US markets that it'll be okay, just different.
Speaker 4 (05:18):
Yeah, now I have to give a nod or people
will kind of holler at me because there.
Speaker 3 (05:21):
Are some people who say list, I'll look at it.
Speaker 4 (05:23):
It's not that bad because today we had a really
good auction. We had a five year note auction. So
there's a lot of focus. Is there going to be
a buyer strike on US? Dead Treasure Secretary Beson on
our TV on Friday talked about his data shows, you know, foreign.
Speaker 3 (05:37):
Demand has actually been good and even better in some
of the auctions.
Speaker 4 (05:40):
So I think in the FED minutes which I read
through quickly, they talked about they haven't seen data yet
of kind of an investor outflow, So I think for
now we're not.
Speaker 3 (05:51):
I mean, look at long term meals. So that's a
whole nother story.
Speaker 4 (05:54):
So there there's a lot of factors in that. But
I don't think we're seeing a total buyer strike on
the US debt market. There's more of the fiscal concerns
looming and maybe less reasons why foreigners may want to invest.
We're just not seeing massive selling as of yet. But
I do think you have to just say you can't
count on like someone was saying, we really have to
look at domestic investors even in you know what you're
(06:17):
talking about from companies, there's maybe less money flowing in
from abroad, because if you're not hedging those investments, when
you take those dollars back, if the dollar keeps weakening,
you're taking you're repatriating less. Right, that has to be
a concern. So I think that's why there's a rethink
going on.
Speaker 1 (06:32):
Is there something to be read into here about just
the idea that during this administration there is this America
First agenda at least when it comes to manufacturing, when
it comes to national security. Can we read into that
when it comes to financial markets too, that potentially the
politics of this just show that the world is becoming
(06:55):
less interconnected and when it comes to financial markets as well.
Or is that not actually happening.
Speaker 4 (07:04):
Well, like I said, some of the data doesn't show
massive outflow yet. But and some folks, you know, even
officials I won't name names, say oh, that's not going
to happen. But I don't think tim, you can preclude
that from happening, because you know, it's just like we said,
that trend that's been going on for a while. Even diversify,
you know, like foreign currency holdings, people want to have
(07:24):
a little bit less than dollars.
Speaker 3 (07:26):
That has picked up a pace. So I do think
you don't have to worry about like, oh right now.
I don't think the.
Speaker 4 (07:32):
Massive volatility we're seeing, and we're seeing a lot in
debt markets and inequity markets in the US, I think
that's more driven by the on again, off again changes
in trade policy.
Speaker 3 (07:42):
The bill moving through Congress.
Speaker 4 (07:44):
What people think it's outlook is for the trajectory of
the debt and deficit.
Speaker 3 (07:48):
But it's kind of like this slow current moving that
the money.
Speaker 4 (07:53):
You're going to see less foreign money flowing into this country.
I think, slowly, slowly picking up a pace.
Speaker 2 (07:58):
All right, Good to check in with you, always, always,
Lis McCormick
Hosts And Creators
Tim Stenovec
Carol Massar
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