On Wall Street and the White House, many people believe that the decline of green has been long. According to the Great Financial Crisis, entering 2025, the US currency has appreciated more than 50% from the trough JPMorgan Private BankingMoreover, the strength of the dollar has helped our stocks become the world’s jealousy.
Now, the weaker green back seems to give foreign stocks a chance to catch up. But the United States still Main hubs of Artificial Intelligence Revolutionat least so far, U.S. assets can pay huge trends and regain potential customers immediately.
Still, President Donald Trump’s chaotic tariff promotion may have ushered in a new era. Earlier this month, the currency basket in the prestigious DXY index has dropped by 10%. This is the biggest loss for the Green Guard in the first half of this year, shortly after the U.S. and several allies reached an agreement, it has been called the “Platform Agreement” to devalue the overpriced dollar.
Although in conflict Between Iran and Israel-American alliance, investors are not close to making up for the story of Egypt, becauseLiberation Day“Early April. This shows the so-called “For Sale in the United States“Trade still has legs,” said Bill Sterling, global strategist at GW&K Management. wealth last week.
“There is enough room for further decline in the plan for things,” said Sterling, a former chief international economist at Merrill Lynch.
If tariffs continue to weigh on U.S. growth prospects, U.S. assets will be lowered. Although it seems that the US dollar is not used as the world Reserve currency Soon, it may no longer have the same confidence.
Sterling noted that over the past few decades, foreigners have funded the U.S. explosive deficit by purchasing U.S. assets (whether it is stocks, treasury bills, dollars, etc.). And the Republican Party’s “big and beautiful” Expenditure bill It seems that it is not ready to change the country’s debt trajectoryindeed including Regulation Foreign capital will be taxed from several key trading partners.
“With a 7% deficit-to-GDP ratio of 7% and foreign capital is needed to help those deficits, actively considering measures to discourage capital inflows is almost the secret to the weak dollar,” Sterling said.
He believes that Washington’s rapid policy shift has prompted corrections to a long-standing overvalued dollar. He and many others point out that in the long run, the framework should allow the same amount of goods and services to be purchased in any country.
Depend on The economist’s big mac indexthere are many reasons why this concept often does not work in the real world. Sterling wrote in a recent study that the IMF data showed that the dollar, with a purchasing power of 105% last year, was overvalued, a previous peak in 1985 and 2002.
But, he said, this imbalance cannot exist forever and the ball may be rolling now. According to Bank of America monthly fund manager Pollshorting the dollar has become one of the most popular industries in the world, but more than 60% of respondents still say that the Green Guard is overvalued.
“Once a trend is established, it sometimes feeds on itself,” Sterling said of the money market.
Can AI maintain “American exceptionalism”?
If the decline in the dollar persists, it will have a significant impact on the economies around the world and on the stock portfolio of Americans.
Since the global financial crisis, U.S. stocks have far surpassed the rest of the world. The foreigner’s response was to draw funds from the United States and now own 18% of the U.S. stock market, according to Torsten Sløk, two Apollo chief economist.
But these trends could reverse if the dollar weakness drives investors to allocate more money elsewhere. Sterling notes that when Americans buy foreign stocks and see the decline in Greenguard, their returns will be greatly improved.
Meanwhile, Trump-driven trade tensions seem to force developed country (Like Germany) and Emerging economies He said (for example, China) focuses on stimulating domestic demand, and the stock market is often rewarded.
He pointed out how the Japanese market responded Square Agreementwhich led to the rapid emergence of the Japanese yen against the US dollar.
“This is considered a hammer blow to the export industry,” he said. “But the Japanese stock market was one of the most powerful markets in the world throughout the second half of the year (in the 1980s) because they were very aggressive in lowering interest rates.”
Comparing several voices that may be timely with the Trump administration, including Vice President JD Vance and major economic advisers Stephen Mirana weaker dollar was proposed previously to improve the competitiveness of U.S. exports. Milan even talked about the potentialMar-a-Lago protocol“Planning another devaluation of green.
This type of transaction may be unrealistic, but the money market looks like it is doing the work. At the same time, many foreign stock markets are more than just weathering tariff uncertainty.
For example, Hong Kong’s Hang Seng Index grew more than 20% this year, while the S&P 500 S&P 500 rose nearly 3% as of Monday’s end. Meanwhile, the Standard & Poor Latin America 40 quietly soared 20%.
Sterling admits that his arguments about the weakening of the dollar are very wary. He added that there is a lot of optimism – maybe a well placed trade, which many people think is still in the early stages. If the U.S. leadership in that field soon disappears, no matter what happens to U.S. trade and economic policy, it will be shocking.
This means investors will need a lot of dollars to prevent a sharp decline in green.
“Perhaps our excellence remains the main story in the global economy, although tariffs and all relevant policy measures have weakened our position, which has lifted us out of a huge abnormal performance,” he said.
However, technical leadership doesn’t always guarantee a great equity return, especially when the dollar is relatively weak. Sterling noted that from February 2002 to July 2011, the MSCI EAFE index covered large and medium-sized companies in developed markets outside North America, with nearly doubled value. The S&P lags far behind, gaining over 40% of that span.
