{"text":[[{"start":8.88,"text":"We should be in no doubt now that Donald Trump is ripping up global markets. The only question is how far the rest of the world goes in using it against him."}],[{"start":19.880000000000003,"text":"We really should have seen it coming. Before Trump retook the White House a year ago, one of his key financial lieutenants, Stephen Miran, wrote a detailed if baffling paper about a so-called Mar-a-Lago Accord — a recognition that for the US, the global hegemon, everything is “intertwined”. Trade, finance and defence are three legs of the same stool, and each can be used to reinforce the other in the interests of America First. "}],[{"start":50.21,"text":"Miran was later appointed to chair the president’s prestigious Council of Economic Advisers. He has since snagged a plum role in the Federal Reserve, where he has advocated for Trump’s preferred monetary policy: sharply lower interest rates. True, the administration, and Miran himself, have sought to downplay some of the 2024 paper’s key points, explaining it was just a thought exercise teasing out a collection of options for the new era of US greatness."}],[{"start":82.21000000000001,"text":"But just as Project 2025 has turned out to be a how-to guide for the Trump presidency, so the Mar-a-Lago Accord framework, or something at least very similar to it, has slipped into being. Coincidence, maybe, but if threatening tariffs on supposed allies as punishment for their failure to support Trump’s crackpot territorial expansion plans is not that, then what is it?"}],[{"start":109.56,"text":"As the paper says: “President Trump views other nations as taking advantage of America in both defense and trade simultaneously: the defense umbrella and our trade deficits are linked.”"}],[{"start":124.11,"text":"On Monday, the market reaction to Trump’s latest assault on the global order has been extremely telling. The rules of the road up to now have been pretty simple: geopolitical shocks push up the dollar and US government bonds because they are the safest, most reliable, most easily tradeable bits of the global financial system. They are very useful shock absorbers when bad stuff happens, even when it is born in the US."}],[{"start":153.11,"text":"That role has been creaking for a little while. But now, the wobble is plain for all to see. Bad stuff is very clearly happening with regards to Greenland. The dollar and Treasuries, however, are weakening. Not dramatically — although it is notable that benchmark 10-year US government bond prices are now at their weakest since September — but clearly. German Bunds and UK gilts, meanwhile, are doing just fine."}],[{"start":183.44,"text":"It’s not necessarily wise to extrapolate too far from a short-term market shakeout but this is a strong hint that investors are doing two things: disregarding the dollar and Treasuries as safe retreats, huddling instead in the warm embrace of gold, and treating a US-born shock as a reason to sell US assets. The latter may seem obvious. This is, after all, how emerging markets and smaller economies have always fared. It is a brave new world for the US, however, and one that will reinforce the urge among big investment firms to park a greater share of their resources in Europe, Asia and indeed anywhere else over time."}],[{"start":229.34,"text":"This is a huge vulnerability for the US, and one that people around Trump are certainly aware of. It is no coincidence that he backtracked on his most aggressive trade policies last April when the bond market became, in his word, “yippy”. He needs a strong bond market to help fund his fiscal agenda, not a weak one that jacks up his borrowing costs."}],[{"start":252.38,"text":"Deutsche Bank has pointed out that “Europe owns Greenland, it also owns a lot of Treasuries”. By “a lot”, it means around $8tn worth of US Treasuries and stocks. It’s a fun thought experiment to wonder what would happen if Europe sold all of that to keep Trump’s Arctic ambitions in check. The reality, even setting aside how “Europe” would somehow force decentralised independent holders of capital to sell US holdings, is mutually assured destruction. "}],[{"start":284.51,"text":"But that is not really the threat here. This is not about “sell America”. It remains the case that no other market is big enough to absorb that kind of outflow. Instead, this moment is a big incentive for investors to buy more bonds and stocks from elsewhere over time. The next time a big pension scheme’s large allocation to US bonds matures, does it make sense mechanically to flip the proceeds into another US bond? Or to spread things a little more globally?"}],[{"start":317.84,"text":"Serious investors were very clear, even before the latest escalation, that they favour option two. Trump’s bizarre designs on Greenland and his willingness to inflict financial pain on allies will simply bolster that case. The US has squandered its most valuable financial asset: trust. It risks paying a heavy price for this for decades to come."}],[{"start":349.5799999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1769012501_2356.mp3"}