ITPM Flash Ep76 -Time for Geo' Risk Rotation- Summary

ITPM Flash EP 76 Summary with ITPM senior mentor Jason Mcdonald

Introduction: What's Going on in ITPM Flash 76?

Alright, let's talk currencies — not something the ITPM crowd dives into often, but in Flash 76, Jason McDonald makes a strong case for why we should all start paying closer attention.

In this episode, Jason zeroes in on the US dollar’s sharp decline and how that's shaking things up globally — from Taiwan’s insurance sector to the balance of power in global equities. If you're a global investor, a macro nerd, or someone trying to make sense of what could come next, this one's packed with gold.

Let’s break it all down.

The Dollar Decline: More Than Just FX Noise

Jason kicks off by highlighting something that many investors have missed: the US dollar, as measured by the DXY (Dollar Index), is down roughly 9% year-to-date. That’s no small move.

Now, pair that with the NASDAQ 100, which despite a decent rebound, is still down 4-5% YTD — and you've got a market dynamic that's punishing anyone long on US dollar-denominated assets, especially foreign holders.

So, why does this matter?

Because foreign capital, especially from Asia and Europe, has long been funneled into US equities — a market seen as deep, liquid, and home to the world’s top corporations. But a weakening dollar is eroding those returns. And that’s starting to change behaviour.

Spotlight on Taiwan: The $450 Billion FX Mismatch

Let’s talk about the eye-opening stat Jason shared: Taiwanese life insurers have a $450 billion FX mismatch, which is about 60% of Taiwan’s entire GDP.

• Assets in USD.

• Liabilities in TWD (Taiwanese dollars).

• And around $200 billion of those assets are unhedged.

Yikes.

That means when the USD weakens — like it has — these institutions take a serious hit. And in recent months, the TWD has rallied over 10% against the dollar. That’s a massive pain point for anyone with USD exposure.

This isn’t just an FX story. It’s a macro liquidity story. Because if big players like Taiwanese insurers are forced to rebalance, they start selling USD assets and moving capital back into local currency. And this is where the dominos start to fall.

Hot Money Reversing Course

Jason emphasizes that this shift isn't unique to Taiwan. Similar currency strength has been seen in Korea, Singapore, and most notably, Europe — where the euro has also strengthened about 10% year-to-date against the dollar.

This points to a broader trend: “hot money” that was pouring into the US is now reversing course. And that creates a potential unwind in US equity overexposure.

Now here’s where Jason gets tactical.

A Global Rebalancing of Equity Dominance?

Since 2012, US equities have hovered around 52-57% of global market capitalization. But since 2022, the US has broken out of that range — now making up 66% of global equity market cap, an all-time high.

Jason poses a key question:

“Is it more likely that the US moves to 70–80% of global market share… or reverts back to the historical average?”

He leans toward mean reversion — either through:

• A US sell-off, or

• Outperformance by other global markets via valuation rerating, stronger currencies, or a combo of both.

  
  

And that’s where his positioning starts to make a lot of sense.

Why This Matters for Retail and Institutional Investors Alike

Jason’s not saying the US is in trouble. Quite the opposite — he acknowledges the US remains the most competitive economy with the best capital markets.

But relative performance matters. If you’re managing a global portfolio and ignoring FX and valuation distortions, you’re flying blind.

Here are a few key lessons from Flash 76:

• Watch for FX mismatches in regions with high USD asset exposure.

• Understand how currency appreciation can trigger capital repatriation.

• Don’t assume the US will always outperform — mean reversion is real.

• Explore diversified global plays with strong fundamentals and attractive valuations.

  
  

What Comes Next? Keep an Eye On…

If you’re watching this macro setup unfold, here are a few things to keep on your radar:

✅ Further dollar weakness — Could trigger more global capital shifts

✅ European fiscal policies — Especially around defense and energy.

✅ Emerging markets — Brazil is front and center, but keep watching India and Vietnam too.

✅ Taiwan’s insurance sector — A potential weak link if USD devaluation deepens.

✅ China’s stimulus plan — A wildcard that could send EM assets soaring.

Alternative to a Conclusion: Jason’s ITPM Flash 76 in a Nutshell

Let’s wrap it up with a quick cheat sheet:

• The US dollar is down, and that’s not good news for foreign holders of US assets.

• Taiwan is sitting on a ticking FX mismatch bomb, with billions unhedged.

• Global capital might be quietly rebalancing, and it’s not just about Taiwan — it’s Europe, Korea, and beyond.

• Jason McDonald is betting on a global mean reversion, favoring underpriced international names over overvalued US tech.

FAQs

1. What is ITPM?

ITPM stands for the Institute of Trading and Portfolio Management, which offers trading education and mentorship, led by professionals like Jason McDonald.

2. What’s a currency mismatch?

It’s when a financial institution holds assets in one currency and liabilities in another — which can create losses if exchange rates move unfavorably.

3. Why is Taiwan's FX mismatch so important?

Because it's huge — about 60% of their GDP — and largely unhedged. If the USD weakens further, it could force major asset reallocation.

4. What’s the MAG7?

A nickname for the 7 largest US tech companies, often seen as overextended in valuation. Jason suggests shorting them against better-valued international names.

Final Thoughts: Don’t Sleep on FX and Global Rotation

ITPM Flash 76 is a wake-up call. If you’ve been tunnel-visioned on US markets and ignoring currency risk, now’s the time to zoom out.

Jason McDonald is sounding the alarm — and offering a clear, strategic path forward.

As the global chessboard shifts, one thing is clear: smart capital doesn’t sit still.

Disclaimer:

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