The Canary in the Coal Mine: Why the Dollar's Weakness Matters More Than You Think

March 31, 2025 | Season 7 | Episode 12 The weakening US dollar may be the canary in the coal mine for broader market troubles ahead. Despite conditions that should strengthen it—high interest rates, geopolitical uncertainty, America"s military dominance—the greenback has fallen against nearly every major global currency in 2025. This unusual pattern suggests foreign investors are losing confidence, potentially withdrawing the capital that traditionally supports US stocks and bonds. Meanwhile, markets are bracing for what President Trump calls "Liberation Day" on April 2nd, when new tariff policies are expected. Reports of a possible 20% universal tariff on all imports have sent tremors through Wall Street, with Goldman Sachs cutting its S&P target twice this month. The potential $11,000 price increase on imported vehicles illustrates the real-world impact these policies could have on consumers and businesses alike. The artificial intelligence sector appears to be entering a crucial transition phase where investors demand tangible returns on massive investments. Drawing fascinating parallels to the 1990s internet boom, experts remind us that only 1% of today"s internet giants existed just 2.5 years after Netscape Navigator launched. Today"s market leaders may not be tomorrow"s AI champions, suggesting opportunities in companies like Snowflake, Intuitive Surgical, and cybersecurity firms that will protect increasingly vulnerable AI systems. For fixed income investors, discussions about potentially eliminating municipal bond tax exemptions to fund Trump tax cut extensions present both risk and opportunity. While concerning, municipal bonds have already priced in some of this uncertainty, potentially creating value for long-term investors willing to weather the volatility. As we navigate these complex market currents, watch the dollar"s trajectory carefully—it may tell us more about where markets are heading than traditional economic indicators. What signals are you watching as we enter this period of heightened uncertainty? ** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice. For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure ** To learn about becoming a Herold & Lantern Investments valued client, please visit https://heroldlantern.com/wealth-advisory-contact-form Follow and Like Us on Youtube, Facebook, Twitter, and LinkedIn | @HeroldLantern