US wealth manager Morgan Stanley is issuing a major warning about the future of the US Dollar and stocks, much to the advantage of the BRICS bloc. According to the bank’s chief investment officer, the structural forces weighing on the dollar are threatening to spread to US equities in turn.
“Consider preparing for a US dollar regime shift,” cautioned CIO Lisa Shalett. According to her, deteriorating relations with BRICS founder China, the end of yield curve management in Japan, and rising Bitcoin and commodity prices suggest that the US Dollar “might be hitting its limit.”
“While correlation is not causation, the correlation of US dollar strength to P/E ratios is worth monitoring now that the greenback’s bull market cycle may be maturing,” Shalett writes.
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BRICS’ Threat To The US Dollar Grows
The BRICS bloc will likely be delighted to hear this warning from a major Western wealth manager. As discussed constantly with the BRICS bloc, de-dollarization is at the heart of the alliance’s mission. Shalett also isn’t the first official to voice concerns about the future of the greenback. US Government officials and other bank representatives have shared concerns about the US dollar, even naming BRICS as a future threat.
The US dollar has declined slightly over the past few years after dominating the global reserve for decades. Many nations worldwide are looking for alternative currencies to the US dollar, including local ones. BRICS countries have actively worked to ditch the US dollar and trade in local currencies. The bloc is also looking to develop its own native currency and may issue an update on that during its next summit.
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Morgan Stanley’s Shalett also encouraged investors to look beyond the US Dollar abroad for future stock returns as a hedge against a potential correction in US equities. It seems as though the threat by the BRICS bloc is now affecting the US stock market. If the US dollar continues to fall, this will affect the stock market negatively. With further interest rate cuts potentially coming, the US Dollar’s hot start to 2024 may be halted early, thus re-opening the door for BRICS.