Hi everyone,
As you probably know, Jerome Powell is expected to step down from the Fed at the end of May. Over the last few months, Trump has been pushing hard for interest rate cuts, but Powell has held off, mainly because the US job market is still fairly strong and inflation remains a bit too high.
Once Powell leaves, Trump will be the one appointing his replacement, and it seems reasonable to assume that a Fed chair chosen by Trump might be more open to cutting rates.
Rate cuts usually make borrowing cheaper for companies, which can boost hiring and speed up economic activity, in simple terms, that’s generally good for the S&P 500. On the flip side, they also tend to push inflation higher and often weaken the dollar against the euro.
Given this, do you think it makes sense to switch from a euro-denominated S&P 500 index fund to a currency-hedged one?
For anyone who hasn’t really felt the impact of dollar weakness, just look at the numbers: over the last year, the S&P 500 is up about 17% in USD, but only around 4% in EUR.
I'm Portuguese and that's why don't want it in dollars.