The falling US dollar and rising Aussie is a flag that top market expert investors need to be careful about. Believe it or not, those LA riots over immigration underline a brewing problem for the US and, potentially, stock markets!

In an interesting piece in Chanticleer in the AFR, we were introduced to experts who, in a nutshell, say President Trump’s crackdown on immigration will undermine what has been called American “exceptionalism”, which relied on “a mix of high employment growth and low wages that has powered the US economy in recent years now risks going into reverse,” the AFR reported.

While tariffs are a problem, there are those more worried about Trump’s immigration ‘method’, which is showing the largest back-to-back decline in the foreign-born labour force in America since the pandemic shut the borders in 2020. “While everyone is focused on the impact of tariffs, the real story for the US economy is the collapse in immigration: down more than 90 per cent compared to the run rate of previous years, equivalent to a slowing in labour force growth of more than 2 million people,” says Deutsche Bank’s global head of FX research, George Saravelos, talking to the AFR. “This represents a far more sustained negative supply shock for the economy than tariffs.”

In simple terms, if the immigration policy hits US economic growth (just like the tariff policy is expected to do) at least in the short term, this won’t be good for Wall Street and stock prices. And remember, big Aussie super funds are heavily invested in US stocks.

In the SMH in January this year, Alex Joiner informed us that “the total pool of Aussies’ retirement savings is $4.1 trillion, or around 149% of GDP – one of the largest pools of retirement capital in the world as a percentage of GDP.”

But Joiner added: “Institutional funds currently have around $1.2 trillion in offshore investments – or around 46 per cent of their invested assets.”

So, if Trump hurts US growth, this will send US stocks down and the value of super fund assets they own in the US and that will hit our super returns.

Historically, our stock market generally plays ‘follow the leader with Wall Street, so you have to be a little concerned about Trump, US immigration and what it does to economic growth in the world’s biggest economy.

Portfolio manager and co-head of global fixed income at the Boston-based Loomis, Sayles & Co, David Rolley, advises some of our big investment and super funds. He’s worried about the 10% fall in the greenback.

While Rolley concedes the US economy has “its charms”, he thinks the stock and bond markets might be too cocky about the future, while the foreign exchange market could be more on the money. He’s a dollar bear, so this expert thinks the US dollar will fall and that’s a sign the Oz dollar will rise.

He and the foreign exchange market could be too negative on US economic growth because lower interest rates, tax cuts and deregulation, plus Artificial Intelligence will be big pluses for Wall Street and the economy. But his warning suggests that a reduced exposure to the US might be a good idea.

By the way, we don’t always play follow the leader with US stock markets, but we need something exceptional to help us outperform, such as a mining boom. That’s why we have to hope China pulls a rabbit out of its economic hat sooner rather than later!

Right now, money is flowing out of the US looking for safe assets and it might partly explain why CBA’s share price has surged to nearly $180.

Meanwhile, more fund managers are looking to Europe and have been taking money out of the US because of Trump’s threat to American exceptionalism. A lower dollar is also good for emerging economies and these funds have started to show some promising returns.

Let’s hope our super funds are following the money out of the US.