America does not allow global investor to violate trust

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The writer is the founder of algebra investments and CEO

The most valuable currency in the markets. As investors, we learned this simple truth, sometimes in a difficult way. Confidence varies from each number to macroeconomic data from earnings reports. Represents the main bond between investors and investments. When trust is lost, it takes a long time to reset it.

Trump leadership, high, but high in the investor’s confidence in the United States, but at once. The integrated external property of the US market securities, the will of the trust only exceeds 31st. However, in the last three years, 2008 has seen the borders of the system passing since 2008. So the strongness of trust is difficult and difficult at the same time. Today’s Tariff-Induction Sell ​​the market is proof of this.

Management of US debt has never been so difficult. Federal debt organized by the people, the highest postwar level reached 100 percent of GDP. This was 36 percent in 2005. Interest expenses are 3.2 percent of GDP, twice as many years.

This percentage of the bill can be compared to the levels reaching the mid-1990s, when interest rates are 6 percent. However, the leadership was then managed by the primary surplus and debt levels were significantly lower. Even the most conservative forecasts, the public debt expects to increase in the next 10 years.

Global investors play an important role in financing this process.

International holdings of the US Treasury Securities are only 8.5TNs. The debt portfolio is 90 percent of the US current account deficit fund. Both public and US general liabilities trust in the foreign appetite for US debt securities.

When the establishment of debts, when it comes to history rhymes. Regardless of the position of the country or time of time, there is a point in the upper part of the risk of increasing debts. This is not the country, not only the country, but it is especially true. When the issue is achieved, the belief suddenly can be lost, with interest rates and unclean effects.

If it is not possible to wait for the exact type level, there are ways to reduce the risks around.

First, the US Treasury should give a sign of discipline to markets. US costs could not normalize Covid, despite healthy economic growth. The initial shortcomings have been less than 4 percent, in the increased social security load and less movement in the arbitrary front. Interest expenses are not comfortable because the US debt price is below market prices.

The good expected of the 2017 individual tax discounts of the Trump Administration will be the first real test in this direction. The Congress Budget Management estimates that in the lost income in 10 years, it estimates that it can cost 4.6tn, a number to digest for the markets.

Second, US policy needs to be predicted. Since the day of the day, the global markets were really thinking of what country’s plan was. The president and its main staff gave various and sometimes contradictory expressions on trade, financial and regulatory policy. Markets are lost and the main street is. The market weakness, which follows tariff ads, is a card.

In the United States, politics indicators are always close to high. Was just 2020 higher. This is unnecessary because the United States is not in the crisis. Forecasting is a low-hanging fruit carrying a high confidence dividend.

Third, international relations should be smoother. The United States is the strongest nation in the world and is natural to use the goal to make concessions from partners. However, the latest rhetoric falls below the US goal – the world needs America, but not the opposite.

This view is only correct because they want to finance the growing attack of global investors. Gunboat diplomacy and strict risk of harsh protectionism alienation partners. This is not the threat of reducing foreign direct investment and the lack of marginal recipients for US assets. Contrary to US supporters.

For decades, the United States has received a strong currency and low interest rates than the economy in exchange for secure secure assets.

Economists call this “extreme privilege.” But every privilege requires responsibility. The selection currency for global capital is confident. America’s best interest in the abolition of this currency.