- US market dominance ending, European shift begins.
- USD weakening impacts capital flows.
- European equities favored over US by Gundlach.
The shift in capital flow underscores global adjustments in equity markets, potentially affecting risk sentiment and liquidity broadly.
Gundlach, a well-regarded market strategist with a history of accurate forecasts, highlighted this trend reversal in a recent CNBC interview. He emphasized the increasing appeal of European equities due to favorable currency dynamics. For 18 years, foreign investments favored US markets, but Gundlach sees Europe emerging as the new financial focus. This pivot reflects concerns regarding the dollar’s trajectory and European equity performance. The US may see reduced investment inflows as Europe attracts more capital.
“Foreigners have been very willing – downright enthusiastic, almost euphoric – about buying dollar assets over the past 18 years or so… That may be reversing… And I mean over for real… if you own it in euros and you get the currency translation, you are just printing money right now. And that trade, I believe, is just getting started.” — Jeffrey Gundlach, CEO, DoubleLine Capital
As Gundlach’s prediction suggests, a weakening dollar and capital flow changes may indirectly impact cryptocurrency. While direct crypto effects were not mentioned, macro trends can influence assets like BTC and ETH. Analyzing past dollar bear markets and global capital rotations aids understanding of potential outcomes. Ongoing macroeconomic shifts may affect digital asset liquidity and speculative interest globally.
Potential regulatory impacts on capital flows remain uncertain. Monitoring these trends alongside technological advancements in digital currencies will be important. The role of crypto could expand as investors seek alternatives amidst changing economic landscapes.
