This episode explores the evolving perspectives of European finance on US-EU relations, particularly concerning Trump's tariffs and the potential for de-dollarization. Against the backdrop of a changing geopolitical landscape, the interview features Daniel Lacalle, who offers a European asset manager's viewpoint, contrasting it with the dominant media narrative. More significantly, the discussion delves into the impact of these shifts on the dollar-euro exchange rate and the long-held "TINA" (There Is No Alternative) investment strategy favoring US equities. For instance, Lacalle highlights the concerns among European fund managers regarding the unpredictability of US policy and its effects on cyclical sectors. As the discussion pivoted to the sustainability of US debt, Lacalle emphasizes the unsustainable fiscal trajectory and the potential for a shift away from US Treasury bonds as the primary reserve asset, with some central banks turning to gold. In contrast to the "zero or one" doomsday scenarios of complete de-dollarization, Lacalle suggests a more gradual decline in the dollar's dominance, impacting US economic growth and the cost of borrowing. This means for investors a need to carefully consider the risks and opportunities presented by these shifting global dynamics, particularly concerning the US dollar, European assets, and the potential for stagflation.
