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Tag: geopolitics

Prepare for End of US Dollar Cycle, as Emerging Markets Rise (Szn 7, Epsd 2)Podcast episode cover art feat Rohit Goel, Breakout Capital

Prepare for End of US Dollar Cycle, as Emerging Markets Rise (Szn 7, Epsd 2)

Published February 13, 2025

With Rohit Goel, Breakout Capital

Rohit Goel of Breakout Capital joins the podcast to discuss his view that the boom in the US dollar (and in US dollar-denominated assets) will soon give way, to be replaced by a long-awaited bullish cycle in emerging markets.

This podcast episode was recorded Friday, Feb. 7 and released to premium subscribers the following business day. There are numerous other benefits to becoming a premium subscriber, which can be read on our Substack.

Content Highlights

  • Markets have grown accustomed to US dollar dominance and with it a surge in US assets, specifically stocks. That is due for a cyclical reversal (1:00);
  • There are three factors supporting US growth. One of them is almost certainly due to run its course (4:43);
  • The global economy revolves around the US consumer as driver of growth. But that too can change — and other markets are better equipped to pick up the slack on their own (9:26);
  • Despite all this, the US dollar should maintain its status as reserve currency. However, its dominance is waning (14:55);
  • Background on the guest (23:28);
  • Big tech stocks have worked very well for over a decade. But things are shifting to eat into their cashflows and there are reasons to believe too much optimism could be priced in… (26:07);
  • The trend is for growth to originate elsewhere than US tech… (30:28);
  • Discussion of frontier markets (35:33).

The guest requests listeners connect through LinkedIn.

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The Looming Iceberg Ahead of the US Economy (Szn 7, Epsd 1)

Published January 28, 2025

Les Rubin, Main Street Economics

Les Rubin of Main Street Economics joins the podcast to discuss his chief concern facing not just markets and economies, but the world at large: US sovereign debt.

This podcast episode was recorded on Wednesday, Jan. 22, 2025 and released to premium subscribers the same day. Information on premium subscriptions, including the vast benefits, are available on our Substack.

Content Highlights

  • The US economy is headed to ‘serious problems’ and the guest’s mission is to educate people to the gravity of the situation (1:47);
  • Debt and fiscal deficits are nothing for the US. But its debt/GDP ratios is reaching a breaking point (2:57);
  • How soon might the breaking point arrive? (5:30);
  • Is there anything from the new Trump administration that might turn the tide? Elon Musk’s DOGE program has promise… (11:02);
  • What about tariffs? (16:22);
  • Background on the guest (20:36);
  • The need for more education: not just financial literacy, but economics (23:55).

More Information on the Guest

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Trump Victory a Big Win for Cryptos, Small Cap Stocks — USD?AI-generated image of Donald Trump as 'roaring bull' with US dollar backdrop

Trump Victory a Big Win for Cryptos, Small Cap Stocks — USD?

Published November 7, 2024

Losers include all things renewable energy, bonds, China, and (for now) gold…

This post was originally published the morning of Nov. 6, 2024 in the Daily Contrarian.

The election is over. Trump won. That is going to have broad impacts, not all of which are apparent yet.

AI image of Donald Trump as raging bull against US dollar backdrop

The immediate impact of Trump’s victory appears to be a broad move to the riskiest of risk assets. Cryptos being Exhibit A. Small caps are forging ahead. You also have Tesla (TSLA) soaring overnight. Meme stocks are up too, but less.

The losers include all things renewable energy, with solar stocks taking it on the chin overnight. The Invesco Solar ETF (TAN) is down 9% at the time of this writing. Big oil, on the other hand, is gaining ground with Exxon Mobil (XOM) and Chevron (CVX) up 3% each at the time of this writing.

Financials are winners as well. Not just big names like JPMorgan Chase (JPM) and Bank of America (BAC) but regional banks. The SPDR S&P Regional Banking ETF (KRE) is up 8% overnight.

Another loser: China. The iShares China Large-Cap ETF (FXI) is down 2%+. Names like Alibaba (BABA), JD.com (JD) and PDD (PDD) are moving lower.

All That Glitters…

Just keep in mind that the immediate reaction to political events is not always the right one. In 2016 at this time there was a broad sell-off. One can expect things to be volatile, especially as retail investors take short-term gains…

That brings us to a first possible opportunity. There has been a pullback in gold overnight, a likely result of the ‘strong dollar’ trade ushered in by this Trump victory. There are three problems with this trade, however:

  1. Trump has railed against USD strength;
  2. Trump’s policies are widely expected to be inflationary. You’ve seen the resulting sell-off in bonds. That means a weaker USD;
  3. The Federal Reserve is cutting rates, which is also bad for the USD.

One would expect all of this to, in time, be good for gold. During Trump’s first term the precious metal rallied by 55%. Past performance is not always a guide to future results, but gold tends to do well under Republican administrations (+215% in eight years of George W. Bush).

Make no mistake, though: gold has been on a massive tear all year and only recently pulled back from all-time highs:

Still, if gold keeps dropping it may present a buying opportunity keeping items 1-3 above in mind.

Full disclosure: The Contrarian owns some physical gold as well as SPDR Gold Shares ETF (GLD) in a retirement account.

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