Which Way Wednesday – 1,343 Days to Go!

And let’s not forget that this magical Dollar Devaluation isn’t just a happy accident – it’s the result of a deliberate policy cocktail. Let’s examine Trump’s Project 2025 recipe for a 10% weaker Dollar and what it means for your portfolio, your paycheck, and, yes, even our Global standing:

🚢 How Did Trump Weaken the Dollar?

• • • • Tariff Mania: The Trump administration’s on-again, off-again tariff blitz-especially the threat and imposition of new tariffs on China and Europe-has spooked global investors and disrupted trade flows. Instead of making the dollar a safe haven, it’s made it a hot potato. Goldman Sachs notes that “US tariffs are expected to weaken the dollar as GDP growth slows,” with the greenback forecast to fall another 10% versus the euro and 9% against the yen and pound over the next year 3.

      • Uncertainty as Policy: The rapid policy whiplash-one day threatening 60% tariffs, the next promising deals, then back to more tariffs-has eroded confidence in U.S. governance and the reliability of U.S. assets. Investors are now looking at the euro, yen, and even gold as safer bets 6.

      • Loss of Safe-Haven Status: Traditionally, global turmoil sends investors running to the dollar. Not this time. The unpredictability and perceived politicization of U.S. institutions (think Fed independence, rule of law) have led foreign investors to question whether Treasuries are still the world’s ultimate safe asset 6.

      • Debt and Deficits: Let’s not forget the ballooning U.S. deficit and the growing pile of Treasury debt, which, coupled with lower global demand for dollars, has further pressured the currency 5.

What Happens If Tariffs Return in July?

If Trump resumes his “punishment tariffs” this July, expect the dollar to face even more headwinds:

• • • Trade Deficit: Higher tariffs may reduce imports, but they also raise costs for U.S. businesses and consumers, hurting growth and corporate profits 3.

    • Foreign Retaliation: Trading partners are likely to retaliate, reducing demand for U.S. goods and, crucially, for the dollar itself.

    • Investor Flight: More uncertainty means more capital fleeing to other currencies and assets, putting further downward pressure on the greenback 6.

S&P 500: 60% International Revenues-Who Wins and Loses?

• • • Weak Dollar = S&P 500 Earnings Boost: Roughly 60% of S&P 500 revenues come from overseas. A weaker dollar means those foreign sales translate into more dollars on the balance sheet-great for big multinationals like Apple, Alphabet, and Exxon 5.

    • But… It’s Not All Good News: If tariffs bite and global growth slows, international demand for U.S. goods can fall, offsetting some of the currency benefit. In Q2 2024, S&P 500 international revenues actually dipped, showing that currency isn’t everything-real demand matters too 4.

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    • Strong Dollar = Headwind: If, by some miracle, the dollar rebounds (say, if the Fed hikes rates or increased global chaos makes the U.S. look relatively stable again), those same companies will see their overseas earnings shrink when converted back to dollars, putting pressure on EPS and stock prices 4.

So yes, let’s all raise a glass to the weak Dollar because nothing says “winning” like watching your Global Purchasing Power evaporate while your stock portfolio treads water (at best!). If Trump keeps doubling down on tariffs and policy chaos, expect the Dollar to stay weak, S&P 500 Multinationals to get a temporary earnings sugar high, and your paycheck to keep shrinking at the grocery store. But hey, as long as your assets are denominated in Dollars – your liabilities are too! What’s a little Global Financial Realignment among friends?

It’s The Trump Dollar Doctrine: “Making America’s Money Weaker Again-so your stocks look better, even as everything else gets worse.”