Part 16/19:
Regarding the U.S. dollar, McDonald sees a long-term decline driven by escalating debt, political hubris, and the desire among policymakers—particularly under Trump—to weaken the dollar deliberately to boost exports and reshore manufacturing. While he doesn't believe the dollar will lose its reserve currency status during his lifetime, he emphasizes the secular bearishtrend—intermittent rallies notwithstanding—that will see the dollar weaken over the next five years.
He attributes this to “hubris”—reckless spending, misuse of monetary policy, and a series of policy missteps that have undermined confidence globally. The dollar’s decline, in turn, will favor hard assets, commodities, and cyclical sectors like energy and basic materials.