Get Out Of The Dollar (G.O.D.)

Arthur discussed:

• Global currency markets are on the edge: the US dollar will become pro-cyclical, and the euro will become counter-cyclical.
• This regime shift would upend financial market correlations, and most investment portfolios are not positioned for it.
• The main driver of currency markets will change from interest rates to the balance of payments.
• The dollar’s dependence on net foreign flows into US equities is far greater today than ever.
• A low bar for US dollar depreciation: No net capital outflows necessary — just smaller inflows.
• A weaker US dollar will be deflationary, not reflationary, for the rest of the world.
• EM stocks will not rally in absolute terms despite a weak US dollar.
• Which asset classes and regions will perform the best during this US dollar devaluation?