The KE Report
Marc Chandler - Capital Outflows, Gold’s Surge, and the Growing US Risk Premium
US markets are under pressure as capital continues to exit the country. Marc Chandler sees this as the fourth major shock in recent years - after COVID, the war in Ukraine, and US-China decoupling - with a new “US shock” centered around rising tariffs and geopolitical unpredictability.
European investors are unwinding heavy US exposure from 2023, rotating capital into bonds or back into home markets. Meanwhile, gold’s breakout reflects a global search for safety and trend momentum, while the dollar is not benefiting from its usual safe haven role.
Marc believes we’re headed for a pronounced slowdown, not stagflation. The Fed may begin cutting rates mid-year but not because inflation is back at 2%, rather due to a weakening labor market. Until then, risk aversion is high, capital is sitting on the sidelines, and preservation, not growth, is the priority.
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