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Focus on Policy Mix Strengthen Dollar Bull Case
Our bull case for the US dollar has been predicated on the divergence of monetary policy and the relative health of the financial system. What is new, and investors are anticipating, is fiscal policy. After several years of reducing the budget deficit, both Trump and Clinton promised fiscal stimulus. Trump offered more infrastructure spending and tax cuts than Clinton. His economic team, though formal appointments have yet to be announced, suggests $1 trillion fiscal stimuli (~6% of GDP), which is larger than even Sanders advocated in the primaries. At the same time, investors are more confident of a Fed hike next ... (full story)