“The Market’s Big Question on Trump, Tesla’s Boost, and the Dollar’s Risk” -Julian Brigden, Co-founder of Macro Intelligence 2 Partners, a guest on Negocios TV, a Spanish language business and financial news channel,  explained that as the U.S. economy expands due to rising employment and consumption, the country tends to run a large current account deficit, meaning it imports a significant amount of goods. This deficit must be financed by foreign capital. As countries like Brazil and Argentina know all too well, if foreign investors stop funding the deficit, a serious problem arises.

Brigden further explains that this situation creates a cycle where money flows into the U.S. and is invested in American assets, which in turn supports the economy. Using a chart, he illustrates that this cycle depends on the dollar remaining strong, as investors have injected money into the U.S. in their own currency without hedging risks. Since this capital finances the U.S. current account deficit, any weakening of the dollar could destabilize this financial cycle.