Weak Tech, Weak Dollar
Welcome to the new regime, which could last a long time
Our models don’t like US Equities or US Treasuries and they don’t like the dollar either. This is an unusual set of circumstances, but one which we think we can explain. The key is to understand the relationship between tighter US monetary policy, lower valuations for mega-cap tech and the unravelling narrative of US exceptionalism. US Bond yields may be rising, but yields in other currencies are rising faster. We strongly recommend that investors reduce their exposure to US Equities and increase their exposure first to Europe and then later to Emerging Markets.