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The simple relationship between Emerging Markets and the U.S. Dollar is the single, biggest driver in the recent move within those asset classes, according to Hedgeye CEO Keith McCullough.

When emerging markets slow and the currencies in those countries become devalued, investors flock to the U.S. dollar, driving up the value of the greenback. The opposite was true when the world was in a globally synchronized recovery from 2016 through 2017. It’s really that simple.

“When the world slows, or you have global divergences, the world flows away from what they were speculating on,” McCullough explains in the clip above. “And when there’s a globally synchronized recovery, the number one loser is the U.S. dollar.”

Watch the clip above for more.

McCullough: Why the Dollar Has Strengthened - the macro show