The Dollar, Equities and the Economy
Many economists and strategists presume the U.S. dollar must appreciate if the economy’s growing robustly. But that view rarely fits the facts. Moreover, contrary to the (related) view that a weaker dollar “stimulates” exports and the economy, what’s truly bullish for both the U.S. economy and equities is unfortunately something that we’ll not get over the coming year. Here we re-visit our currency and equities forecasts and analyze the historical correlations since 1972 between the U.S. Dollar, equities and the economy in three different contexts – to demonstrate what change will signal bullishness.