Investors at Milken eye foreign shores as tariffs cloud US outlook

Davide Barbuscia and Svea Herbst-Bayliss

Wed, May 7, 2025, 9:21 AM 4 min read

By Davide Barbuscia and Svea Herbst-Bayliss

BEVERLY HILLS, California (Reuters) -Market uncertainty caused by U.S. President Donald Trump's erratic policymaking and aggressive stance on tariffs hung heavily over an investor gathering in Los Angeles this week, with many saying it is time to pivot to non-U.S. assets for more clarity.

Concerns over the U.S. economic trajectory, and growing chances of an imminent recession fueled by White House trade policies were major topics at the Milken Institute Global Conference in Beverly Hills, California, where Wall Street dealmakers and global investors gathered to raise capital, sell companies and get a handle on the industry's mood.

On panels and in more than a dozen private interviews on Monday and Tuesday, attendees said the U.S. economy's size and depth of its capital markets left few viable alternatives for a dramatic shift away from American assets. Many, however, said the volatility was pushing them to consider higher allocations to non-U.S. markets, Europe in particular.

"We've spent a lot of time focused on the U.S. and Europe, and historically, we have had a little bit of a bias towards the U.S.," said Purnima Puri, governing partner at HPS Investment Partners, a New York-based credit investment firm.

"We do think Europe is starting to look significantly more interesting, and that's a market we're spending time on," she said on stage at the conference on Tuesday.

Entrepreneur Andre Loesekrug-Pietri elicited grins and pats on the back as he walked the halls sporting a green baseball cap with the words "Make Europe Great Again," in a tongue-in-cheek poke at Trump's red "Make America Great Again" hats.

While many downplayed the risk of capital outflows from the U.S. that spooked markets in the immediate aftermath of Trump's tariff announcement last month, the search for alternative geographies was a major theme at the event.

Some bankers characterized it as a chance to diversify portfolios with too much U.S. exposure, particularly earlier this year and late last year, when the market was betting Trump's second presidency would boost the economy through deregulation and tax cuts.

Contributing to the shift are Europe's improved growth prospects and lower asset valuations.

"At the start of the year, I think the view was that the U.S. was the place to be, and that's where capital is going to flow, and ... that has shifted differently," said Lee Kruter, partner and head of performing credit at GoldenTree Asset Management, speaking on stage.