Margin calls and dollar devaluation

[SARose]

Hedge funds face biggest margin calls since 2020 amid tariff turmoil, FT reports
Apr. 06, 2025 10:30 AM ETS&P 500 Index (SPX), GLD, SP500By: Rob Williams

Hedge funds have been hit with the biggest margin calls since COVID-19 shut down huge parts of the global economy in 2020, after Donald Trump’s tariffs triggered a rout in global financial markets.

Wall Street banks have asked their hedge fund clients to stump up more money as security for their loans because the value of their holdings had tumbled, according to three people familiar with the matter. Several big banks have issued the largest margin calls to their clients since the beginning of the pandemic in early 2020.

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Next up for markets: A crisis of confidence in the dollar
By Dhara Ranasinghe, Alun John and Gertrude Chavez-Dreyfuss

LONDON, April 4 (Reuters) - In times of market panic investors tend to rush to the safety of the dollar, but when stocks swooned in response to U.S. tariffs this week, they ran away from it. Investors say it's a sign that the greenback’s global standing may be eroding.

The dollar, for decades a safe haven, on Thursday fell about 1.7% in its biggest daily drop since November 2022 (.DXY), opens new tab, after President Donald Trump imposed tariffs on imports at levels not seen since the early 1900s. Stock markets also tanked, as tariffs ignited recession worries.

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Any erosion of the dollar's standing as a safe-haven is bad news for investors and policymakers - at least in the near term.

For investors, who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer. That's because price pressures at home could make it harder for the Federal Reserve to cut rates.

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And this - totally missed it

Trump trade advisers plot dollar devaluation

By GAVIN BADE
04/15/2024 05:00 AM EDT
Economic advisers close to former President Donald Trump are actively debating ways to devalue the U.S. dollar if he’s elected to a second term — a dramatic move that could boost U.S. exports but also reignite inflation and threaten the dollar’s position as the world’s dominant currency.

The idea is being discussed by former trade chief Robert Lighthizer — a potential Treasury secretary pick for Trump and the architect of the former president’s bruising tariff campaign against China — and policy advisers allied with him, according to three former Trump administration officials granted anonymity to discuss confidential policy plans.

Purposely devaluing the U.S. dollar by pressing other countries to alter their own currency values would represent the most aggressive proposal yet in Trump’s attempts to reshape global trade. The potential moves would go beyond the tariffs of Trump’s first term and the expansive industrial subsidies for clean energy enacted by President Joe Biden. A weaker dollar would make U.S. exports cheaper on the world market and potentially reduce the U.S.’ yawning trade deficit.

“Currency revaluation is likely to be a priority for some members of a potential second Trump administration, mainly because of the viewpoint that [an overvalued dollar] contributes to the trade deficit,” said one former Trump administration official, adding that Lighthizer and his team are the primary advocates for the approach.

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My husband watches a YouTube channel that brought up the scenario of a Black Monday based on the above. Markets continue to fall, margin calls, more falling markets as hedge funds divest, gold rises and dollar devalued.

What do you think?

[nilram]

1. I'm not a fan of USD being the world reserve currency,

but we sure have benefited from it. Clearly tariffs are going to stomp on trade with the US so there's less point for other countries to hold it. This is going to add fuel to the inflation fire. Thinking the Euro will be the next stronghold.