The Dollar Might Be BOTTOMING — And The COMEBACK Will Be Violent

0:00Hello, everyone. We've got a lot to discuss today on Monday. The US dollar comeback may be upon us. BlackRock proves why Wall Street can't get enough about Bitcoin. And Stanley Druckenmiller, the GOAT investor, tells one of the most insane investing stories that you will ever hear. We're live today from the desk of Anthony Poppliano.

0:27Now, the United States of America was built on one idea, risk-taking. And whether it was citizens pushing West in search of freedom on the frontier, or it's modern self-directed investors allocating capital in financial markets, the United States has always, always, always been unique compared to the rest of the world when it comes to our risk appetite. You can clearly see this in the recent public equity data as well. Goldman Sachs shows that U.S. investors have nearly four times higher exposure to stocks as a share of household assets. That's more than other countries like Japan, UK, and China, and those other countries are very far behind.

1:00That risk taking from U.S. investors has been a great decision in hindsight. U.S. equities are destroying other geographies. Charlie Belolo shows that over the last 17 years, U.S. stocks have gained 592 % versus 140 % for international stocks and 93 % for emerging markets. Now, that type of outperformance is pure dominance, and there will always be people scared of investing at new all-time high prices. Yet the data suggests that maybe one of the best times to invest ever is at all-time highs. You can look out over six months, one year, two years, three years, and five years. Investing at all-time highs leads to better performance.

1:35But now there's a new fear that has everyone spooked in the market. The decline of the U.S. dollar. We've discussed in recent weeks how the U.S. dollar is down more than 10 % to start the year. That's the worst first half of a year in decades. Bar chart points out that it is now or never for the dollar index. The metric is now hitting the lower end of a rising band that currency has traded in for the last 15 years. But maybe, just maybe, this isn't as bears as everyone wants you to believe, though. One macro strategist on X, known as Endgame Macro, great name, has a non-consensus view on the current moment in time.

2:08They write, quote, This chart may appear to signal a breakdown in the dollar, but in reality, it may be the staging ground for one of the most violent reversals in recent history. The dollar index is testing the lower bound of a multi-decade ascending channel, a level that has repeatedly marked inflection point since 2008. Every time we've touched this range, the dollar has launched higher. Yet what makes this moment unique is the timing. The Fed is on the cusp of rate cuts. While conventional wisdom sees easing as dollar negative, the structure of global finance often flips that logic. When the Fed cuts into a disinflationary or risk-off backdrop, capital floods into the deepest collateral pools, and that still means U.S.

2:46dollars and U.S. treasuries. The rate cut becomes the trigger for a flight to dollar safety, not a flight from it. Powell's refusal to cut thus far, despite the softening labor markets and the collapsing consumer sentiment may not be driven solely by domestic macro data. It could be a strategic delay, which is engineered to lure the BRIC countries and non-aligned nations deeper into de-dollarization efforts just as liquidity begins to fracture. These countries have repositioned in local currencies, gold, and bilateral trade packs, but they've also left themselves highly exposed to a dollar squeeze, especially if the U.S.

3:19dollar liabilities remain in their corporate or sovereign debt structures. Once the Fed cuts, the ensuing surge in dollar demand for collateral safety and relative yield could catch them completely off sides, forcing them to scramble back into the very system that they just tried to exit. And this wouldn't be the first time such a trap has been sprung. The dollar surged after 2019's Fed cuts. It exploded higher during the March 2020 crisis. And in the 97-98 Asian financial crisis, nations that tried to assert monetary independence were crushed by sudden dollar strength. History shows us that when global actors overestimate their insulation from dollar liquidity cycles, they suffered.

3:56Powell holding the line on rate cuts may be less about the domestic economy and more about setting the stage for a strategic snapback, one that reasserts dollar dominance precisely when the rest of the world thinks it's fading. Now, here's the thing. That's a fascinating way to look at the current situation. It's a pretty unique viewpoint. It's definitely non-consensus. The important question is whether this view is correct or not. No one knows for sure, but it doesn't seem crazy to be optimistic or bullish right now when it seems like everyone else is fearful. So stock allocations are exploding higher for American households.

4:26The stock market continues to push higher and higher as it outperforms other regions. And the U.S. dollar, which everyone thinks will continue weakening forever, may be ready to reverse course and remind the world why U.S. dollars are the global reserve currency. Time will tell what happens. Just make sure that you, yes, you in your portfolio, keep your mind flexible. Don't become dogmatic about any scenario or outcome. The world is more dynamic than ever before, and you will need your critical thinking skills as we continue accelerating faster and faster into the future. BlackRock's new Bitcoin ETF has become one of the hottest products on Wall Street, maybe even the hottest product in history.

5:02The asset manager is now making more revenue from the Bitcoin ETF than they are making from their S &P 500 ETF. Wait, what? Yeah, you heard me right. Take a listen to exactly what's happening here. BlackRock is making more money off of Bitcoin than they are making on the 500 largest U.S. public companies. That's a checkmate to the traditionalists. Bloomberg's Isabel Lee writes that the roughly$75 billion iShares Bitcoin Trust ETF, ticker IBIT, has seen a torrent of cash from institutional and retail investors alike. It's drawn inflows in all but one of the last 18 months. Crazy run. It's got an expense ratio of 25 basis points, and that means it's bringing in$187.2 million in annual fees based on their back-of-the-envelope math.

5:42Now, that slightly edges out the$187.1 million made by BlackRock's S &P 500, IVV, which is nearly nine times larger at around$624 billion in assets, but only charges three basis points. Now, this development is important for two reasons. First, Wall Street is going to come chasing this type of financial performance. It's a copycat industry. Once someone starts making a profit, everyone lines up to take as much market share as possible. We're going to see that happen here. The second important takeaway is that Bitcoin is doing the opposite of what people have predicted for decades. The digital currency, which was created and operated outside of the system for nearly 15 years.

6:18Now Bitcoin is bringing people into the traditional financial system as Bitcoin's system merges and it becomes adopted by the legacy players. ETFs are just one example. Bitcoin treasury companies are another. This is going to continue to happen. Bitcoiners are assaulting Wall Street, and given BlackRock's profits, Wall Street is not going to be mad about it. I don't see this changing anytime soon. Once Wall Street figures out how to make money on an asset, They're going to stuff it in every single corner of their industry that they possibly can. That's exactly what we're seeing happen right now.

6:49Stanley Druckenmiller is the GOAT investor. But did you know that one time he lost$600 million on a$200 million investment and it only took him three weeks to lose the$600 million? Take a listen to how it happened. Our shorts have been fine this year, except by in-depth shorts, which have been a disaster. But we always short the same way. I just try and look at the current situation, and then I try and think of a situation 12 to 18 months from now based on my forecast. And I think if I think the security prices are going to be less, then I short them. Frankly, I'm not sure I've ever made money.

7:30When I was at Soros, I shorted$200 million worth of internet stocks in March of 99 and in three weeks covered them at a$600 million loss. I lost$600 million on a$200 million investment in three weeks. I was short 12 stocks. They all went bankrupt. Every one of them. Don't try that at home. Now here's my takeaway from this whole situation. Sometimes you can be right and still lose money. Druck knew that the stocks were overvalued in the dot-com bubble. But even though he was short, it was mistimed and he ended up losing$600 million. And it goes back to the old adage, do you want to be right or do you want to make money?

8:09And in this case, sometimes when you're right, you still can lose money. It's a great reminder that no matter how good you are, no matter how much money you've made, and no matter how skilled you think you are, there's always someone out there, something in the market that's standing there ready to humble you. That's it for today. I hope you guys are enjoying the show. I'm having a blast putting this together every single morning. Please make sure that you're following us on X and make sure that you're subscribed on YouTube. I'll see you guys live tomorrow from the desk of Anthony Pompliano.