Gundlach noted the inverse correlation between the dollar and the twin deficit - the U.S. deficit plus the trade deficit - which has increased dramatically because of the government’s stimulus efforts to combat the effects of the coronavirus shutdown.
“We know with metaphysical certitude that the twin deficit is going to go way higher, I’d say to at least 12% of GDP. That would suggest the dollar going all the way back to 2011 levels,” Gundlach said. He believes the rising twin deficit will drive the dollar lower, despite the currency’s appeal as a safe-haven investment and the likelihood that such assets will be in demand if U.S. stocks fall from their current levels.
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Hmm... wheres the recession that the experts were talking about? Oops.
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