This overlooked risk to financial markets usually lurks quietly under the surface. But now it’s ‘shouting, not whispering’

Finance·This overlooked risk to financial usually lurks quietly under the surface

But now it’s ‘shouting, not whispering’BY Jason MaBY Jason MaWeekend EditorJason MaWeekend EditorJason Ma is the weekend editor at Fortune, where he covers, the economy, finance, and housing

SEE FULL BIOA television broadcasts President Donald Trump during a press conference on the floor of the New York Stock Exchange on Wednesday

Michael Nagle—Bloomberg via Getty ImagesMuch attention has been focused on the U

Current account deficit, or the imbalance between imports and export, but there’s another metric that’s poised to amplify market shocks

That’s the net international investment position, according to Kevin Ford, FX and macro strategist at Convera, who ns it to America’s financial scorecard with the rest of the world

President Donald Trump’s trade war has focused much of Wall Street’s attention on the U

Current account deficit, or the imbalance between imports and exports

But there’s another metric worth ing that could worsen financial risks

According to Kevin Ford, FX and macro strategist at Convera, the country’s net international investment position (NIIP) often gets overlooked

It measures how much the U

Owns abroad versus how much the world owns in the U. , he said in a note last week, describing it as America’s financial scorecard with the rest of the world

And by that score, the U

Assets once deemed reliable safe havens

In fact, the dollar’s year-to-date plunge is the worst since the U

Meanwhile, legislation that would add trillions of dollars to fiscal deficits is advancing in Congress, stirring more anxiety among foreign investors, especially those who hold U

Put it all together, and this year has been a textbook example of how a negative NIIP file can magnify currency turmoil, Ford warned. “And because so much of the capital pping up the U

Financial system comes from abroad, even small shifts in sentiment can lead to big outflows,” he added. “That’s a lot of dollars being sold, and fewer being bought, and voilà, the greenback stumbles. ” Circling back to the financial scorecard analogy, Ford explained that the blem with focusing on the current account deficit is that it only shows the flow of transactions, i

Imports versus exports

By contrast, the NIIP shows the overall pile of debts—and ignoring that would be judging a person’s spending habits without checking their credit card balance, he said, making trust “your most important asset. ” “Yes, trade deficits, interest rates, and Fed signals all play a role, but the NIIP tells you just how exposed the U

Is when things go sideways,” Ford. “It’s the quiet structural risk lurking under the surface, ready to amplify shocks

Trump’s unrelenting pressure on Federal Reserve Chairman Jerome Powell to cut interest rates has also weakened the dollar lately

Offers some hope for relief

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