Charles’ Take: War in Iran Sparks Dollar Surge

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1:01He's earned decades of Wall Street success, a lifelong student of the market who learned to navigate the world of finance with unshaking confidence, an underdog who achieved the American dream. Now the Fox Business Host is sharing all his investing wisdom with you on Charles Payne's unstoppable prosperity podcast. All right, my next guest says, watch the dollar. That's where it all begins, right? And remember, the consensus at the beginning of the year was for a week dollar, and a lot of trades revolved around that. So what happens if it's not weak? Well, let's bring in BNY, the wealth ahead of investment strategy, also equity, elitial of being. So we've got the dollar and, you know, it was working according to script, but now it's kind of changing. This is about the highest level since May of last year, so this is a real pivotal point for it. So we do think it's a pivotal point, and what pivoted the dollar is the war in Iran. So what happened last year at the beginning of 2025, so at the beginning of strength of the dollar, and then with the tariffs,

2:02you saw the dollar weakening and rest of world markets outperform. So all the international markets outperformed the US market, and that really stuck through the end of the year. And that was the consensus trade going into 2026 because the dollar was expected to weaken further, which it did, as you can see, in the beginning of 2026. Now we have the war in Iran. We have a flight to safety. The dollar is up 4 percent in the last two weeks, and all those trades where the international was outperforming the US in emerging markets was outperforming the US had become undone. Yeah, we're going to show like a small versus large, that's also been flipped on its head. We're going to bring that up here. So again, you know, you got this, I use the Russell versus the S&P done extremely well, but now all of a sudden it's faltering a little bit. We'll also do the rest of the world versus the S&P. I use VEU. There's a lot of things you can use, but it's going to be a very similar chart. The rest of the world versus the spiders, and this goes back to last year, right? Right out the gate. That's right.

3:03The rest of the world outperformed America by the S&P by a huge margin, and they picked it up right here again, right out the gate. Bam. Bam. It's come down a little bit. Echo of last year. Yeah. So at what point does this change, you know, like, because you've got to be, you know, people ride the winners. This is a winning trade. At what point do you start to reconsider it? Like, is the dollar gets to 98? 100? Like, where does the dollar have to get? Okay. So this is really about the one I ran here. Okay. Because ultimately, the US is less vulnerable to an oil shock and the inflation shock that comes from higher oil prices than the rest of the world is. And as a result, there's been a flight to safety to the dollar, but it also means US corporates can probably handle higher oil prices more than international corporates are. And that's what you're seeing. I think some of that trade gets reversed. I get very uncomfortable when everybody believes the same thing, the weaker dollar, international markets. I think it's going to even out here. And I think this is what's going to happen. And the longer the war goes on, the more likely tech is going to outperform. The S&P is going

4:06to outperform. The S&P will also be better than the Russell because small cap is dependent on the expectations for rate cuts. And rate cuts are getting priced out of the market. Yeah. Yeah. Maybe second half of year. Some are saying that at all. America leads the world in medicine development. It matters. We get new medicines first, nearly three years faster. Five million Americans go to work because we make medicines here at home. And not relying on other countries keeps us safe. But China is racing to overtake us. Will we let them or will we choose to stay ahead? When America leads, America cures. Let's tell Washington to keep us in the lead. Learn how at AmericaCures.com. Paid for by Farma. You like the broad tailwinds, fiscal policy, monetary policy. You just talked about earnings. I want to bring up the next table because we only got a minute to go and talk a little bit more about the tech. This is today's session. But we're seeing this the last few days. And what was intriguing today is that all parts of tech, semi's hardware and software. And this is the

5:09trait you're saying. It might be the one that's fools everyone. This might be the one that comes back really strong. That's right. Well, look, software is now now underperformed semi's by 70 percent in the last several months. That is unheard of. The sector is tempting you to take a risk. Right. Because it is so underpriced. As I said, I think tech works here with the multiple came down from the mid 30s to the low 20s. Tech is now trading at the multiple of the S&P, also unheard of. I think it's time where you step back into tech here. Because it's already been repriced. Right. You know, in the end, you want to go where the repricing has happened. We were worried about profit and tech. And here we are. Yeah, we're repriced. It's tempting to go back. And you have to love the risk reward of these levels. Yes. Alicia, thank you so much. Great to see you. You know, always great to see you. You've been listening to the Charles Payne's unstoppable prosperity podcast. Make sure you subscribe to this series and don't forget to rate and review. And keep listening so I can help put you on the path to unstoppable prosperity now.

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