Let's unpack size of USD transaction market vs its role as reserve currency by global central banks vs nominal price of USD relative to FX peers vs real value of USD relative to things/asset prices.
Two thoughts: 1) Equities as a dollar short is spot on. There is truly no alternative to stocks—something I wish I knew back when Bernanke ran the printer after the GFC. As long as M2 keeps rising, our cash ice cubes are melting and we’re stuck in the market for better or worse. 2) Demand for $USD assets will remain substantial so long as large trade deficits remain—those dollars have to get recycled back into Treasuries or similar instruments. But Trump tariffs may take a large bite out of both the trade deficit *and with it* demand for a place to park formerly surplus $USD.
Two thoughts: 1) Equities as a dollar short is spot on. There is truly no alternative to stocks—something I wish I knew back when Bernanke ran the printer after the GFC. As long as M2 keeps rising, our cash ice cubes are melting and we’re stuck in the market for better or worse. 2) Demand for $USD assets will remain substantial so long as large trade deficits remain—those dollars have to get recycled back into Treasuries or similar instruments. But Trump tariffs may take a large bite out of both the trade deficit *and with it* demand for a place to park formerly surplus $USD.