Core Viewpoint - A weakening dollar is beneficial for emerging market stocks, as evidenced by their strong performance when the dollar declines [1][3]. Currency Trends - The U.S. dollar has decreased by 11% over the past year and more than 2% in 2026, as indicated by the U.S. Dollar Index (DXY) [1]. - Factors contributing to the dollar's decline include unpredictable White House policies, pressures on the Federal Reserve to cut interest rates, and unfunded tax cuts increasing national debt [2]. Investment Opportunities - Emerging market (EM) stocks tend to perform well when the dollar weakens, as seen in 2025 when the dollar fell 9% and EM stocks rose by 25.6%, outperforming the S&P 500's 17.7% gain [3]. - The Vanguard FTSE Emerging Markets ETF (VWO) is highlighted as a strong investment vehicle for gaining exposure to emerging markets [4][7]. Market Sentiment - A weaker dollar indicates reduced risk aversion among global investors, leading to increased investment in emerging markets [4]. - The current U.S. administration supports a weaker dollar, with President Trump expressing that it is beneficial for business [5]. Economic Outlook - The International Monetary Fund has raised its growth forecast for emerging markets from 3.7% to 4.1%, largely due to improved expectations for China's economy [9]. - Emerging market stocks are currently considered undervalued compared to U.S. equities, with a forward price-to-earnings ratio of about 13.4 compared to 22 for the S&P 500 [10].