Despite a significant -9% depreciation since January, the U.S. dollar appears poised for further downside. While short-term technical signals may hint at a tactical bounce, deeper structural imbalances suggest the longer-term path remains lower. Historical overvaluation, shifting global portfolios, and weakening U.S. growth prospects all conspire against a sustained dollar recovery. The overvaluation legacy Historical context offers a sobering lens. According to Federal Reserve data, the dollar remains nearly two standard deviations above its real effective exchange rate average since 1973. Only two other periods—mid-1980s and early 2000s—saw similar excesses. In both cases, the dollar subsequently fell by 25–30%. The current setup, while not a crystal ball, bears unmistakable resemblance. Portfolio rebalancing: the quiet giant The scale of global exposure to U.S. assets is… Read more
Trump’s Market-Moving Announcements (2017–2021): Timing and Volatility Patterns
Background: Trump’s Announcements and Market Volatility Between 2017 and 2021, President Donald Trump’s public statements – from tweets to official policy announcements – became notorious for moving financial markets. Traders and analysts closely watched Trump’s Twitter feed and press remarks for clues, as even a single tweet could whipsaw stock prices or bond yields. Two key gauges of market fear and volatility often referenced in this period were: Trump’s term saw dramatic swings in both indices, frequently in reaction to his policy decisions on trade, Federal Reserve commentary, and later the COVID-19 crisis. This raised the question: Did Trump and his administration time their market-moving announcements strategically? Observers have speculated that provocative announcements often came during calm markets, whereas reassuring messages were deployed amid… Read more
Update on Portfolio Positioning Amidst Renewed Volatility
The equity rally in Europe throughout 2024 and early 2025 has proven as short-lived as we expected—confirming the fragilities we consistently flagged (see our May 2024 newsletter: link). The latest downturn, deepening in recent days, is politically triggered rather than driven by endogenous economic weakness. This episode illustrates not only the cost of chasing momentum at the wrong time, but also the real pain of following the crowd: portfolios that paid performance fees are now left with sunk costs. European bond market volatility, meanwhile, represents tactical opportunity rather than systemic risk. On the systemic front, our internal models detect no structural distress for now. Finally, we are reactivating our deep value framework—recently upgraded with the latest academic insights—to reposition equity exposure with a strategic… Read more