Pompliano: The US dollar will strongly rebound after depreciation. Now is the best time to invest.

The depreciation of the US dollar over the past six months has raised concerns in the market. At the beginning of this year, the dollar's decline exceeded 10%, marking one of the worst first-half performances in decades. According to data from Barchart, the US dollar index is at a 15-year low, which has left the market filled with doubts about the future trend of the dollar.

However, not everyone is pessimistic about this. An analyst with the nickname End Game Macro has offered a different perspective, suggesting that the dollar index is currently testing the lower bound of an upward channel that has persisted for decades. This level has often indicated a strong rebound for the dollar since 2008, and each time it reaches this zone, the dollar tends to rise against the trend.

This article is excerpted from the newsletter compiled and edited by Bitcoin OG Anthony Pompliano, purely market observations, not any investment advice.

Over the past 17 years, the US stock market has risen by 592%.

Goldman Sachs data shows that the proportion of stocks allocated by American investors in household assets is nearly four times that of other countries. The stock allocation ratios in countries like Japan, the UK, and China are far lower than those in the United States. This choice of risk preference is undoubtedly correct in the long run. The outstanding performance of the U.S. stock market has made it the leader in the global market. According to financial analyst Charlie Bilello, over the past 17 years, the U.S. stock market has risen by 592%, while international stock markets have only risen by 140% during the same period, and emerging markets have increased by 93%. This gap undoubtedly demonstrates the absolute advantage of the U.S. stock market.

Despite stock prices reaching historical highs, the depreciation of the dollar has instilled fear in investors, but Anthony Pompliano believes that now might actually be the best time to enter the market.

A rate cut could become a catalyst for the rebound of the US dollar.

Against the backdrop of the Federal Reserve facing pressure to cut interest rates, the opportunity for the dollar to rebound will be more pronounced. Although traditional views hold that interest rate cuts weaken the dollar, macro-financial structures often overturn such logic. When the Federal Reserve cuts interest rates, capital tends to flow into the safest dollar and U.S. Treasury bonds, which may encourage investors to choose the dollar, driving the value of the dollar back up.

In addition, global geopolitical factors may also drive a reversal. Although the global market is facing the dilemma of a weak labor market and low consumer confidence, the United States is not in a hurry to cut interest rates, possibly due to a strategic consideration aimed at making other countries more reliant on the dollar during a liquidity crisis.

The US dollar may bounce back strongly again.

In 2019 and 2020, the US dollar surged after the Federal Reserve cut interest rates, and even during the Asian financial crisis of 1997-98, the strong performance of the dollar directly devastated many countries attempting to resist the liquidity of the dollar. History has shown that when global markets overestimate their ability to withstand the liquidity cycle of the dollar, they end up facing significant losses.

Therefore, although the current market atmosphere seems a bit panicked, maintaining an optimistic attitude towards the rebound of the dollar does not seem so absurd. When other markets are skeptical about the dollar's dominance, this may actually become an opportunity for the dollar to regain dominance in the global market.

As the U.S. stock market continues to rise, the stock allocation ratio of American households has also increased. Although the issue of the dollar's depreciation still carries uncertainty, based on historical experience and the analysis of numerous Wall Street macro strategists, the dollar may be on the verge of a strong rebound.

This article Pompliano: The dollar will rebound strongly after depreciation. Now is the best time to invest. First appeared in Chain News ABMedia.