Unhedged and Burned, Stock Investors Brace for More Dollar Pain

For years, it was the money-minting trade for the investor set in London and Paris and Tokyo: Buy dollars and plow the proceeds into S&P 500 and Nasdaq stocks. Not only were US equity returns far superior to those generated at home, but they were magnified by the steady rise in the value of the dollar.

So when both parts of the trade suddenly blew up after President Donald Trump launched his global trade war, the pain mounted quickly. A 6% decline in the S&P 500 this year ballooned into a 14% wipeout for investors who measure their returns in euros and yen. The speed at which it has all unraveled, along with the constant zig-zagging from the White House, is unnerving investors who had counted on the US to be the ultimate safe haven and generator of outsized returns.