Katie Martin

But it is plausible that

So you're running a pension fund somewhere, your very old 10, 20-year treasury comes up for redemption and you think, well, do I churn this into another 10, 20-year treasury or do I say, maybe actually this time I'm going to stick half of it in Germany, I'm going to stick half of it in the UK.

Maybe I'm going to put some of it in Japan, it's got nice high yields now.

I think that this whole moment at Davos has proven to be a little bit of a reminder that Europe is not without its tools at retaliation.

That's much more obvious with China, which says, look, we've got a whole heap of your treasuries and we can do what we like with them.

By the way, we've got the rare earths.

But it doesn't mean that Europe has no tools.

And I do think that even that suggestion that maybe it won't be mechanically plowing money into the US has rankled some nerves.

I would never presume to advise anyone, but what I can say is that, look, and it's silly to talk about markets as if they're people, but markets do kind of want to go up.

US stock markets want to go up.

They grind higher.

They grind higher.

It's a function of US growth.

It's a function of the US tech miracle, but it's also a function of the fact that you do still have fiscal expansion and you do still have interest rates that are heading lower.

not heading lower as quickly as Trump would like them to, but they are nonetheless heading lower.

That's a recipe for US stock markets to pull higher.

But what I think is, you know, again, we go back to that diversification point, that sort of sell America point, is that if you're not based in the States and you're not based in US dollars, then you still have an enormous vulnerability around institutional credibility and around the resilience of the Fed.

And if they get chipped away out further and we get another big pull lower in the dollar, then we're going to end up with another washout year for overseas investors being parked in the U.S.

And I think, you know, one year you can kind of write off as a bit of an anomaly.

But if this happens again, then we've got a really serious problem.