Worst Stock Market Vs. World Since '95; Where Should Investors Go? | Robin Brooks
Summary
- "Hedge America," Not "Sell America": Despite US equities having their worst start relative to global markets since 1995, foreign flows into US long-term assets (equities, agency debt, corporate debt) remain at record highs. Investors are hedging US exposure rather than exiting.
- The Dollar Bear Case: Brooks expects the US Dollar to fall significantly. The historical premium placed on US institutional quality (Fed independence, Treasury competence) is eroding as central bank independence comes under attack, narrowing the gap between G10 and Emerging Markets.
- Commodity Supercycle: A global flight to safety and institutional debasement is driving precious metals (Gold, Silver, Platinum) higher. This creates a massive tailwind for commodity-exporting nations, particularly in Latin America.
- Reshoring Paradox: While protectionism and tariffs generally lower medium-term growth, the immediate effect of "reshoring" is a short-term growth boost due to a necessary wave of capital expenditure to build domestic industrial capacity.
Trade Ideas
Robin Brooks
Senior Fellow at Brookings Institution
Brooks explicitly names "The Brazils, the Mexicos, the Indonesia, the South Koreas" as markets he expects to "do especially well." He argues that the "institutional quality" premium that separated G10 from Emerging Markets is eroding due to the politicization of Western central banks. Combined with a falling US Dollar, capital will rotate into these specific EMs. Long Emerging Markets with a focus on Latin America (commodities) and Asian manufacturing hubs. A resurgence in the US Dollar or aggressive tariffs from the US administration targeting these specific nations.
Robin Brooks
Senior Fellow at Brookings Institution
Brooks notes a "huge rise in precious metals... gold, silver, platinum" driven by a "broader global push into safe havens." He attributes this not to central bank buying (which he views as passive), but to retail and institutional flight from "institutional debasement" (e.g., Fed/ECB monetizing debt). As trust in fiat institutions declines, hard assets reprice higher. Long Precious Metals basket. A sudden restoration of confidence in central bank independence or a sharp rise in real interest rates.
Robin Brooks
Senior Fellow at Brookings Institution
Brooks states clearly: "I am expecting the dollar to fall. So abroad is better than domestic." The erosion of US institutional exceptionalism (Fed independence under attack) removes the premium investors are willing to pay for the Dollar. Short the US Dollar Index (UUP tracks the DXY). A global liquidity crisis usually triggers a flight to the Dollar (the "smile theory"), regardless of US domestic policy.
Robin Brooks
Senior Fellow at Brookings Institution
In the context of safe havens, Brooks explicitly mentions "Switzerland... those things will outperform." As investors seek alternatives to the US Dollar and Euro due to debt monetization fears, traditional "fortress balance sheet" currencies like the Swiss Franc become the primary beneficiaries of FX diversification. Long Swiss Franc (via CurrencyShares Swiss Franc Trust). The Swiss National Bank (SNB) intervening to weaken the Franc to protect their export economy.
Robin Brooks
Senior Fellow at Brookings Institution
Brooks predicts a "reshoring wave" and "home shoring" will lead to an "investment wave in places like the United States" to build capacity. You cannot reshore manufacturing without physically building factories and infrastructure. This creates immediate demand for industrial construction, engineering, and machinery firms (represented by Industrials XLI and infrastructure builders like Quanta Services PWR). Long US Industrials/Infrastructure Construction. High interest rates making capital expenditure projects too expensive to finance, leading to project cancellations.
Up Next
This The David Lin Report video, published February 23, 2026, features Robin Brooks discussing EWZ, EIDO, EWW, EWY, SLV, GLD, PPLT, UUP, FXF, XLI, PWR. 5 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Robin Brooks · Tickers: EWZ, EIDO, EWW, EWY, SLV, GLD, PPLT, UUP, FXF, XLI, PWR