The biggest financial names are the US bail. Wall Street's richest institutions are cutting their dollars and piled in European markets, as new data shows a massive pullback from US equality and bonds.
According to the Financial Times, this is not a one -time reaction. It is a long-term recession, driven by the chaos in Washington, falling confident in the Federal Reserve, and the latest wave of tariff fights started by President Donald Trump.
The White House was in a warpath against the Fed chair, while a broader policy view went up. Although US stock prices have been bouncing after Trump's “Liberation Day” tariffs, they still go down this year, and ride behind global competitors.
Meanwhile.
European equities soaked in investor money while ETFs are bleeding
Luca Paolini, Chief Strategist in Pictett Asset Management, Says The flow is already underway. “It happens. It will be slow but inevitable,” he said, pointing to low values and increasing German defense budget as clear reasons why investors see more value in Europe.
The evidence is everywhere. In March, a survey at Bank of America showed investors to make their biggest cut in US stock holdings, and the Pivot in Europe has been the fastest since 1999.
In April, € 2.5 billion flowed outside the European-domiciled ETF holding US stocks and bonds-the highest figure since early 2023, based on direct Morningstar data. The bleeding did not stop there. Early in May the numbers show more flows from the Equity ETFs, even though fixed revenues have managed to return a little interest.
Spot markets see a solid US dollar dump in favor of the Euro, and investment banks say institution players are doing most of the trade.
Pension funds on the continents turn away from US assets
Big retirement funds are now leading the release. Laura Wickström, CIO at the Finland pension insurance company, said they had slapped US stock exposure to the first quarter. He noted the great values and confusion caused by tariff decisions.
“The uncertainty and the communication around the tariffs … the confusion and the lack of fulfillment associated with who asked us the idea that you should pay this kind of premium,” Laura said.
In Australia, John Pearce, who runs investments in the A $ 149 billion unisuper fund, shouted the same doubt. He told the funding podcast that his team had “great exposure to US properties” but now “asking that promise.” He added, “Opportunity, I think we saw peak investment in US assets.”
Danish pension funds also participated in the trend. In Q1, they sold US stocks for the first time since 2022 and made their largest purchase of shares listed in Europe since 2018.
Sam Lynton Brown, head of the MacRO strategy at the BNP Paribas, said that if European pension funds would return their exposure to the US in 2015 levels, this means dumping € 300 billion investment denomination dollars.
For years, the US has been the leading destination for capital, supported by liquidity and strong return to the market. But John Butler, a Wellington management strategist, said the flowing turns. “If the globalization of the capital enters, the question becomes how far and fast it is.”
Even in the US, institutions are not sure about the dollar. Scott Chan, CIO in California's $ 350 billion retirement system, told his board this week that “one of the accidental dangers and consequences of opening a Pandora box in tariffs” may be the leading partners in America to sell US assets. “The question for us is that we need a different difference because we are focused on the US owners,” he said.
The dollar plunge hurts the foreigners who do not give the hedge to their positions. Bank of America estimates that if European investors have hedge their exposure to money as they did pre-covid, involved in $ 2.5 trillion in hedging-something that could drag the dollar more.
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