Dollar Depreciation Has Years to Run: 3-Minute MLIV

Market Impact of Potential US Budget Bill - The market's current interpretation of the budget bill focuses on its potential as a massive net injection of money into the economy, which is expected to boost GDP growth and be positive for stocks [2] - Concerns about the debt side are not currently driving market dynamics, but the risk of the bill failing or facing extended delays is potentially underestimated by the market [3][4] - The market is trading positively, with small caps rallying, indicating a broadening of the bullish sentiment [4][5] Dollar's Depreciation Trend and Potential Bounce - The long-term trend for the dollar is depreciation, expected to continue for a couple of years, with potential targets of 130 and possibly higher [7] - A short-term bounce in the dollar is possible due to a public position squeeze, as short-term players have shifted from long to slightly short positions [8] - A risk-off event could act as a catalyst for a positioning squeeze, potentially triggered by the tax bill failing or upcoming trade deadlines [10][11] - A risk-off catalyst could cause deleveraging and squeeze out short positions, leading to a short-term bounce of a couple of percent [12]