US in crisis, Brazil as an alternative, and metals as protection: an analysis from an American fund manager.

The Brazilian stock market is on track to end 2025 with gains of over 30%, with the Ibovespa index in dollar terms rising by almost 50%. This strong appreciation is part of a greater global diversification, with capital outflows from the United States, a trend that, according to American fund manager David Wolf, is expected to continue into 2026.

“There is still a trend towards diversification, with money moving away from concentrations in American assets. This is reflected in metals, such as gold, platinum, and silver. It's a way to protect against a possible devaluation of the dollar ,” says Wolf, in an interview with NeoFeed .

"The most important thing for me is not to be 100% exposed to the dollar. You have to be very careful about that," he adds.

This concern, Wolf says, is linked to the loss of credibility in American monetary policy, given the growing risks of interference from the Donald Trump administration – which he describes as “very chaotic”.

“There was chaos in the US, caused by Trump and the tariffs , which generated an outflow of American assets and the American currency. And it doesn't take much money to affect prices here in Brazil. Some emerging markets even rose more,” he says.

With local issues still unresolved, Wolf believes that high interest rates in Brazil have been a major asset in attracting this capital.

A philosopher by training, Wolf recalls that he entered the financial market almost by chance. Educated in Massachusetts, he moved to New York hoping to pursue a career as a writer. "But I quickly realized that would be impossible," he recalls.

The turning point came when someone suggested he look into sales and trading. "I knocked on doors until I got a job at Payne Webber, in the mortgage trading desk ."

After that, he worked in cities like London, Tokyo, and Minneapolis, before arriving in Brazil to work in Cargill's operations. Since then, he hasn't left the country.

Here, he held positions in the treasury department of Unibanco and, more recently, was a manager at Armor Capital . Currently, he is dedicated to managing his own resources and writing his periodic newsletter, in which he reflects on his market analyses.

"Since I studied Philosophy, I like arguments, logic, evidence — constructing an argument. This helps me in the job market," says Wolf.

Below are the best excerpts from the interview.

The Brazilian stock market is projected to rise more than 30% in 2025, driven by an influx of foreign capital. What explains this influx?
Local investors are very sensitive to politics, for good reason. But foreign investors see investment here as something more macro-level. There was chaos in the US, caused by Trump and the tariffs, which generated an outflow of American assets and the US dollar. And it doesn't take much money to affect prices here in Brazil. Other emerging markets even rose more. But it was a more macro-level story.

Did the election factor play a role?
It was also a movement driven by the possibility of an election with someone from the right. Today, there is concern that Bolsonaro's son [Flávio] has less chance of winning. A contact of mine said: “If Lula wins, I might lose or even gain a little. But if the right wins, I'll gain two or three times what I invested.” They are seeing a positive asymmetry for Brazil. I'm not saying I agree with it.

And what is your vision?
The "trend is your friend." I think it's important to continue investing in Brazil. It's an opportunity: the exchange rate could fluctuate from R$5.30 to R$5.60 in a short time. For example, on Wednesday [December 24th] the dollar fell 1.3%—that was foreign money coming in. They're not exiting their positions. I think both the currency and the stock market can continue to improve. There's still a trend towards diversification, with money moving away from concentrations in American assets. This is reflected in metals: gold, platinum, silver. It's a way to protect against a possible devaluation of the dollar.

"There is still a trend towards diversification, with money moving away from concentrations in American assets."

What has caused this?
The causes are many. The Trump administration is very chaotic, that's clear. And if you look at the long-term yield curves of the G3 and G7 countries, there's a lot of pressure on interest rates—a consequence of accumulated debt. Brazil has a very bad debt situation. It's dangerous. But this fiscal problem also exists in developed countries.

Do you believe that American monetary policy could suffer some loss of credibility due to interference from the Executive branch?
Unfortunately, yes. I think we'll see a de facto merger between the Treasury and the Fed. The Treasury Secretary will accumulate functions and gain weight in monetary policy. This happened during World War II, when the government needed to raise money. Out of patriotism, people bought long-term bonds with yields below inflation. This financial repression lasted until 1952, when they decided to separate the Treasury and the Fed. But I think we're returning to that logic. This generates a lot of discomfort and makes Brazil, relatively, seem more interesting. We have many problems here, of course. I get frustrated, as a foreigner, with the slowness of progress. Governance is very difficult. Three of the last four presidents were imprisoned. So, it's complicated.

So, can we say that, relatively speaking, it wasn't the world that became more attractive, but rather that the United States is no longer a safe haven?
We're talking about fiscal problems, about the lack of clarity on how the Trump administration might interfere in the economy—specifically in the management of the Fed. This generates apprehension and makes investors think: "Where am I going to put my money?" We know that valuations here [in Brazil] are still good. The stock market is paying 15% to withstand the volatility, especially now, which may take a little longer. But yes, the context hasn't changed much. What happened in 2025 leads us to look at 2026. And there is confirmation of this trend of distrust in the developed world—I mentioned metals. It's impressive what they are signaling in this regard.

So what does this mean in practice? Does the market see a risk of stronger inflation in the US due to this interference, which would reduce the purchasing power of the dollar?
That's the way it is. Structurally, we could see the dollar fall significantly. This would happen if the Fed, under the Treasury's direction, brought interest rates well below neutral—say, 1.5%, 2%. This would cause the long-term yield curve to fall. Hedge funds, macro funds, would hold 10-year bonds against funding at 1.5%, with a yield of 3.5%, for example. I'm not saying that's what will happen, but the market seems prepared. And if it does happen, there will be a major shift in financial assets, and the dollar will fall. In a somewhat ironic way, they are "hedging" their positions in the United States with Brazil. It's paradoxical.

"One of the reasons Brazil did well was the cargo handling. If you take away the cargo handling, it becomes less attractive."

How does a Selic rate of 15% factor into the calculations of a foreign investor who decides to hedge with Brazil? If it falls too much, does it reduce the attractiveness of the market?
Yes, falling interest rates here reduce attractiveness. One of the reasons Brazil performed well was the loading. If you remove the loading, it becomes less attractive. Now, on the other hand, this same loading could improve if the Fed is more aggressive in its cuts. It depends a lot on the speed.

In the US, how should the monetary policy cycle unfold?
Today, the market is pricing in very little cuts. The economy is doing well, and no slowdown is expected—much less a recession. If there were a sharp slowdown, it would be a surprise.

How can you protect yourself in this scenario?
I'm someone who strongly believes in the importance of diversification, which doesn't mean buying a healthcare company and a technology company in the US. That's not diversification. Diversification is when you have different asset classes: commodities, stocks denominated in another currency, TIPS (inflation-protected bonds). It's important to have a mix of asset types. Because nobody knows what's going to happen. At the beginning of the year, everyone makes projections: that the stock market will go to 75,000, interest rates to 12%. I have no idea about those numbers. What I want is to be prepared for various scenarios. So I don't die if I'm wrong and I do well if I'm right.

A bit like the logic of Ray Dalio's "All Weather"?
Exactly. What I'm saying isn't anything new. It's the "All Weather" approach. And I greatly admire Brazilian managers who don't have access to, or are limited in their ability to operate abroad. I find it very difficult to generate positive results while remaining restricted. I admire those who can operate extensively here in Brazil. It's very difficult.

Considering this US exit you described, how much of that is already priced in?
Focusing on short-term interest rates in the US, I think what could happen is a slowdown, which is my base scenario. This would bring interest rates down and cause the dollar to fall. Secondly, there is the risk of Treasury interference in the Fed's management. We don't know if this will happen, but the possibility exists. And I wouldn't be surprised.

How can this scenario be adapted to the all-weather model?
The most important thing for me is not to be 100% exposed to the dollar. You have to be very careful about that. Now, within the American market, there's all the discussion about artificial intelligence, about valuation . I think it's important to have some investments in tech, because it's a trend that should continue. Getting into the discussion about overinvestment and leverage is relevant, but if your portfolio is limited, perhaps you don't need to delve so deeply into these more micro issues.

Are there any countries, currencies, or regions that you see as particularly interesting in this diversification process?
I think Europe is interesting. They're almost becoming "adults," in the sense that they'll need to defend themselves, they're investing in infrastructure. Europe is far behind in the technological race, and I think they're aware of that. If they start contributing to the AI race, it would be very positive. So, it's important to have some exposure to the European stock market. Today there are very good ETFs. You can buy ETFs of global stock markets, except the US, European stock markets, European bonds. I use that a lot.

And China?
China has had its moment in my life. Today, you have assets there that already reflect a lot of negative things. But I don't see such a large asymmetry. I think it's worth having some Chinese assets, but I don't think it's a clear case of value.