The Strong Dollar Will Persist a While If Trump Imposes Tariffs
Anton Panayotov, founder and CEO of Alaric Securities on “Business Start”, BloombergTV Bulgaria
The market looks ahead and takes preemptive actions. As soon as it became clear that Trump would win, nearly all assets that needed adjustment reacted immediately. While dramatic changes are unlikely in the first few days, the next four years promise to be eventful. Everyone understands how Trump operated during his previous term. The likelihood of seeing much more of the same is high: a strong dollar, strong oil, and a weak market – that is the prediction. Anton Panayotov shared this outlook on Bloomberg TV Bulgaria’s “Business Start,” hosted by Hristo Nikolov.
Factors Supporting a Strong Dollar
Several factors support the strong dollar. Tariffs top the list, effectively imposing an indirect tax on taxpayers. Despite economic growth and the absence of a crisis, the U.S. runs a 6% deficit. This dynamic results in a weak stock market and a risky bond market. For Trump to deliver on his promises, he must spend more, leading to an even more significant deficit.
“China might counter Trump’s tariffs by devaluing the yuan. However, this approach has its limits,“ Panayotov explained. He emphasized that the U.S. economy is mainly closed and self-reliant. Currently, the average salary in Mississippi, the poorest U.S. state, exceeds that in the United Kingdom.
Investment Strategies and Risks
Panayotov advised investors to adopt a more cautious and conservative approach. The market might see a correction of 15% to 20%, which could feel like 40% within their portfolios. Other alternative markets include Japan and China. While investing in Chinese assets involves risks, a yuan devaluation could open attractive opportunities.
Emerging Opportunities in Key Sectors
“The space sector boasts exceptionally interesting companies, but investing in them requires deep understanding,“ Anton Panayotov noted. He added that changes are also coming to the infrastructure sector. However, many projects, while impressive, could encounter bureaucratic obstacles.
Expected surprises in the U.S. and China center around stimulus measures. The Federal Reserve may resist changes until 2026, but Trump aims to exert control over the institution to align it with the goals of the Treasury Department. “This reflects a clash of concepts about the direction the U.S. should take,“ Panayotov concluded.
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Source: BloombergTV Bulgaria