It's not just Goldman Sachs; large institutional investors are indeed "withdrawing from the U.S. market."

Global large institutional investors are quietly reducing their holdings in U.S. assets. Several major institutions, including the Caisse de dépôt et placement du Québec and Oak Tree Capital, have begun to decrease their investments in the U.S. and shift towards more stable markets like Europe.

According to a report by the Financial Times on June 5, large institutional investors are reallocating funds away from the U.S. market, as trade policy turmoil and rapidly expanding government debt have shaken investor confidence in U.S. assets. A fund manager survey released by Bank of America last month indicated that the allocation to the dollar has seen its largest underweight in nearly two decades.

This shift is particularly evident in market performance: the S&P 500 index has risen less than 2% this year, while the European Stoxx 600 index has surged by 9%. The dollar is nearing a three-year low, having fallen 9% this year.

"The deficit problem is worsening," said Seth Bernstein, CEO of AllianceBernstein, which manages $780 billion in assets. He pointed out that the current borrowing pace in the U.S. is unsustainable. The signature tax reform bill from Trump is expected to increase federal debt by $2.4 trillion over the next decade, exacerbating pressure on U.S. Treasuries.

He suggested that investors should pause and consider: "How much capital do you really want to concentrate in one market?"

Europe Becomes the New Darling of Capital

The flow of funds is confirming this shift. The Caisse de dépôt et placement du Québec, Canada’s second-largest pension fund, recently announced that it will reduce its current 40% exposure to the U.S. in favor of increasing investments in the UK, France, and Germany.

Tom Nides, Vice Chairman of Blackstone, candidly stated:

Shifting funds to Europe is by no means a bad choice; the local governments are relatively stable.

New York investment firm Neuberger Berman has directed 65% of its private equity co-investments to Europe this year, significantly higher than the 20-30% in previous years. Joana Rocha Scaff, head of European private equity at the firm, remarked:

Interest in Europe is increasing. This is not just about tariffs; the macro backdrop in Europe is much more stable.

Goldman Sachs Initiates "Risk Control," Clients Seek to Exit the U.S.

An article from Wall Street Insight mentioned that in the face of the tariff shockwaves from Trump and the trillion-dollar deficit clouds, Goldman Sachs has taken the lead in initiating risk control mechanisms—actively reducing risk exposure and hoarding liquidity ammunition.

President Waldron warned that the U.S. economy is likely to fall into a "slow inflation" quagmire (slowing growth with rising inflation), and he, along with financial giants like Jamie Dimon, has sounded the alarm on the "unsustainable" nature of the deficit.

Meanwhile, executives in Goldman Sachs' asset management division have also warned that the bank's clients are increasingly demanding to withdraw funds from the U.S. market.

Matt Gibson, head of client solutions at Goldman Sachs Asset Management, pointed out that clients are increasingly asking whether the rally in the U.S. stock market has "come to an end" and whether they should turn their attention to European and Chinese stock markets.

The American Halo Fades

Howard Marks, co-founder of Oak Tree Capital, which manages $203 billion in assets, has also begun to question the status of the U.S. market

The United States has been the best investment destination in the world for a century, but I am starting to hear investors question whether American exceptionalism is becoming less exceptional.

While investors acknowledge that the global dominance of the U.S. economy and the depth of its capital markets mean it will still be the preferred destination for global investment, many are questioning whether the more than 15 years of capital inflows and outperformance—pushing the U.S. share of global stock market value to about two-thirds at the beginning of this year—are beginning to reverse.

As an executive from a large U.S. private equity firm stated, President Trump's so-called "tariff unblocking day" has become "a wake-up call for many to realize they are over-allocated to the U.S."