US Dollar
Global capex is driving the strongest industrial cycle since 2021. The US is best positioned to capture the gains and to weather near-term risks, supporting widening real-rate differentials and favoring continued upside in the dollar in the coming months.
If bond yields rise due to widening bond term premiums or escalating inflation expectations, Bessenomics is unlikely to avert a stock-bond collision. Buy back gold mining stocks.
In this report, Martin Barnes, BCA’s Emeritus Chief Economist, reflects on the rise in US government debt, dollar strength, and profit margin expansion that has occurred over the past 25 years. He argues that these trends are unsustainable and are bound to reverse within the next few years.
As long as the AI boom keeps booming, all other investment considerations will remain on the back burner. However, if the AI trade fizzles, this would expose deep-seated problems within the global economy, which could very well lead to an economic downturn as early as next year.
