2026 TeoTwawKi ... 2032 Darkest Interregnum Message Board

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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

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To: bull_dozer who wrote (212146)	3/14/2025 3:36:03 PM
From: TobagoJack	Read Replies (2) of 217646

From behind the curtain zerohedge.com 'Something Painful Is Happening' “Something painful is happening" is the rather ominous phrase that Deutsche Bank's global head of FX Research, George Saravelos, chooses to start his brief note this morning. European investors are currently losing as much money on their S&P 500 holdings as they did during the ~30% inflation-driven sell-off in 2022 (Figure 1). [url=][/url] Why? Despite the drop in US equities, the dollar has failed to rally. Dollar weakness this year has been additive rather than offsetting to underlying asset losses.. It is clear from our conversations with real money investors that the risk-reducing properties of unhedged dollar exposure have played a key part in portfolio allocation over the last decade. When "bad things" happen the dollar tends to rally, so unhedged US risky assets have proven a highly attractive portfolio diversifier. Yet this is now changing. We argued a few days ago that it is the idiosyncratic downward repricing of US fiscal, growth, and Fed expectations (Figure 2) that is causing the dollar to weaken alongside US equities. [url=][/url] Broader rhetoric that challenges the international rule of law may also be undermining dollar safe-haven perception. If this correlation breakdown between US equities and the dollar continues, it will open up a more structural discussion among European (and global) asset managers on the diversification benefits of unhedged risky-asset dollar exposure. Some press reports suggest this may already be starting. By extension, a sizeable net reduction of dollar exposure would be on the cards. We have for a long time not been believers in the concept of a new (say, Mar-A-Lago) currency accord to weaken the dollar. We do believe that policy that undermines the economic soundness of the dollar would achieve the same thing.

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