The Globe and Mail reports in its Wednesday edition that Bank of Canada Governor Tiff Macklem warned that global economic imbalances may be causing overinvestment in the U.S. and creating financial stability risks. The Globe's Mark Rendell writes that Mr. Macklem noted that capital flows between major economies are distorted by factors like China's reliance on exports, the U.S.'s dependence on foreign capital and Europe's weak investment levels. The U.S. runs chronic trade deficits while attracting vast amounts of foreign money, leading to political backlash and a potential financial bubble. Mr. Macklem said cross-border finance is beneficial, but excessive flows can widen trade gaps, fuel protectionism and distort asset prices, leading to misallocation of capital and increased financial stability risks. These concerns have gained significance due to the surge in U.S. equity markets driven by excitement over artificial intelligence and President Donald Trump's efforts to reshape the global economic order with protectionist trade policies. Mr. Macklem noted a concern that increased involvement of nonbank entities like hedge funds and private equity in global finance results in less oversight of crucial markets.