(Bloomberg Opinion) — The era of the U.S. dollar’s “exorbitant privilege” as the world’s primary reserve currency is coming to an end. Then French Finance Minister Valery Giscard d’Estaing coined that phrase in the 1960s largely out of frustration, bemoaning a U.S. that drew freely on the rest of the world to support its over-extended standard of living. For almost 60 years, the world complained but did nothing about it. Those days are over.Already stressed by the impact of the Covid-19 pandemic, U.S. living standards are about to be squeezed as never before. At the same time, the world is having serious doubts about the once widely accepted presumption of American exceptionalism. Currencies set the equilibrium between these two forces — domestic economic fundamentals and foreign perceptions of a nation’s strength or weakness. The balance is shifting, and a crash in the dollar could well be in the offing.The seeds of this problem were sown by a profound shortfall in domestic U.S. savings that was glaringly apparent before the pandemic. In the first quarter of 2020, net national saving, which includes depreciation-adjusted saving of households, businesses and the government sector, fell to 1.4% of national income. This was the lowest reading since late 2011 and one-fifth the average of 7% from 1960 to 2005.Lacking in domestic saving, and wanting to invest and grow, the U.S. has taken great advantage of the dollar’s role as the world’s primary reserve currency and drawn heavily on surplus savings from abroad to square the circle. But not without a price. In order to attract foreign capital, the U.S. has run a deficit in its current account — which is the broadest measure of trade because it includes investment — every year since 1982.Covid-19, and the economic crisis it has triggered, is stretching this tension between saving and the current-account to the breaking point. The culprit: exploding government budget deficits. According to the bi-partisan Congressional Budget Office, the federal budget deficit is likely to soar to a peacetime record of 17.9% of gross domestic product in 2020 before hopefully receding to 9.8% in 2021.A significant portion of the fiscal support has initially been saved by fear-driven, unemployed U.S. workers. That tends to ameliorate some of the immediate pressures on overall national saving. However, monthly Treasury Department data show that the crisis-related expansion of the federal deficit has far outstripped the fear-driven surge in personal saving, with the April deficit 5.7 times the shortfall in the first quarter, or fully 50% larger than the April increment of personal saving.   In other words, intense downward pressure is now building on already sharply depressed domestic saving. Compared with the situation during the global financial crisis, when domestic saving was a net negative for the first time on record, averaging -1.8% of national income from the third quarter of 2008 to the second quarter of 2010, a much sharper drop into negative territory is now likely, possibly plunging into the unheard of -5% to -10% zone.             And that is where the dollar will come into play. For the moment, the greenback is strong, benefiting from typical safe-haven demand long evident during periods of crisis. Against a broad cross-section of U.S. trading partners, the dollar was up almost 7% over the January to April period in inflation-adjusted, trade-weighted terms to a level that stands fully 33% above its July 2011 low, Bank for International Settlements data show. (Preliminary data hint at a fractional slippage in early June.)But the coming collapse in saving points to a sharp widening of the current-account deficit, likely taking it well beyond the prior record of -6.3% of GDP that it reached in late 2005. Reserve currency or not, the dollar will not be spared under these circumstances. The key question is what will spark the decline?Look no further than the Trump administration. Protectionist trade policies, withdrawal from the architectural pillars of globalization such as the Paris Agreement on Climate, Trans-Pacific Partnership, World Health Organization and traditional Atlantic alliances, gross mismanagement of Covid-19 response, together with wrenching social turmoil not seen since the late 1960s, are all painfully visible manifestations of America’s sharply diminished global leadership. As the economic crisis starts to stabilize, hopefully later this year or in early 2021, that realization should hit home just as domestic saving plunges. The dollar could easily test its July 2011 lows, weakening by as much as 35% in broad trade-weighted, inflation-adjusted terms.The coming collapse in the dollar will have three key implications:  It will be inflationary — a welcome short-term buffer against deflation but, in conjunction with what is likely to be a weak post-Covid economic recovery, yet another reason to worry about an onset of stagflation — the tough combination of weak economic growth and rising inflation that wreaks havoc on financial markets.Moreover, to the extent a weaker dollar is symptomatic of an exploding current-account deficit, look for a sharp widening of America’s trade deficit.   Protectionist pressures on the largest piece of the country’s multilateral shortfall with 102 nations – namely the Chinese bilateral imbalance — will backfire and divert trade to other, higher-cost, producers,  effectively taxing beleaguered U.S. consumers.Finally, in the face of Washington’s poorly timed wish for financial decoupling from China, who will fund the saving deficit of a nation that has finally lost its exorbitant privilege? And what terms — namely interest rates — will that funding now require?Like Covid-19 and racial turmoil, the fall of the almighty dollar will cast global economic leadership of a saving-short U.S. economy in a very harsh light. Exorbitant privilege needs to be earned, not taken for granted.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Stephen Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of "Unbalanced: The Codependency of America and China."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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June opened with a bang in the markets following positive news on the jobs front. According to the latest Department of Labor report, U.S. employers added 2.5 million people to their payrolls in May, pushing the unemployment rate down to 13%. For perspective, analysts were expecting the BLS to report job losses of 8.3 million and an unemployment rate of nearly 20%. As societies and states return to a more normal functioning, traders are going to find that some stocks are particularly well positioned to take advantage of post-pandemic conditions. Right now, Wall Street’s analyst corps is working to tag just which stock investors should bet on.We used the TipRanks database to pull up the details on three stocks which the analysts describe as their 'top picks.' Let's take a closer look. Nomad Foods, Ltd. (NOMD)We’ll start in the food industry. Frozen foods have long been a staple in home kitchens, and UK-based Nomad is a major distributor in the niche. The company boasts a $4.3 billion market cap and over $2.2 billion in annual revenues. The social lockdown policies forced a sudden change in consumers’ eating habits. Eating out was out – in favor of eating at home, which led consumers to stock up on essentials, including frozen foods. For Q1, Nomad reported 36 cents EPS, compared to the 31-cent forecast. The 16% beat was accompanied by over $753 million in revenues, 10% above estimates. Looking ahead, analyst see Nomad bringing in $2.6 billion for the current fiscal year.Covering this stock for Wells Fargo is analyst John Baumgartner. He sees the company making and holding inroads with new customers, as eating habits change: “In addition to stronger demand from core consumers (middle-income households with children), altered consumption habits are drawing consumers both younger/millennial and older, and more affluent households.”Baumgartner reiterates the stock among his top picks given "a compelling 12-month risk/reward setup." To this end, the analyst rates the stock a Buy along with a $28 price target, which indicates his confidence in a one-year upside of 17%. (To watch Baumgartner’s track record, click here)Overall, Wall Street agrees with Baumgartner. The analyst consensus here is unanimous; the Strong Buy consensus rating is based on 7 recent Buys. Shares are priced at $20.62, and the $25 average price target suggests room for 21% growth in the coming year. (See Nomad stock analysis on TipRanks)OneMain Holdings (OMF)Moving to the financial sector, we come to OneMain. This holding company controls subsidiaries in the consumer finance and insurance industries. Finance products offered by the company include personal loans and insurance for customers who lack access to bank and credit card lending. OneMain operates in 44 states.The coronavirus economy hit consumers and financers hard. OneMain reported a sharp sequential decline in Q1, with EPS at just 33 cents. This ended 7 straight quarters in a row of earnings beats. The poor results came as OneMain’s customer base, from the lower end of the economic spectrum, had a hard time making payments.Looking forward, however, as the economy opens up, OneMain’s prospects are also looking brighter. With more potential customers both returning to work and short of funds, the company sees strong prospects for increased business.Stephens analyst Vincent Caintic writes of the company, “OneMain has gotten more "surgical" in its originations, for example focusing on industries and regions where there are less issues (e.g. no tourism). Certain industries such as construction have begun opening up after initially experiencing a lock-down related slump.”Caintic named OneMain as a top pick, and in line with this upbeat assessment, Caintic rates the stock a Buy. (To watch Caintic’s track record, click here)Overall, Wall Street’s analysts are bullish here, and the analyst consensus rating is a Strong Buy. This rating is based on 12 Buys and a single Hold set in recent weeks. Yet, shares are selling for $31.55, while the average price target of $33.08 implies a modest upside of 5%. (See OneMain stock analysis at TipRanks)Green Thumb Industries (GTBIF)For the last stock on our list, we head over to the cannabis industry. Since it was legalized throughout Canada in 2018, and as increasing US jurisdictions legalize the substance, cannabis has become big business. Green Thumb, based in Chicago, recently reported an increase in its retail footprint, with its eighth store in Illinois. The new location was its forty-fifth nationally.Green Thumb offers a variety of cannabis brands, including vapes, pre-rolled cigarettes, edibles, and medicinal products. The company $102.6 million in Q1 revenue, and earnings of $25.5 million. The company also reported a switch to positive cash flow during the quarter.Benchmark analyst Mike Hickey sees a bright future for Green Thumb. He writes, “We are confident GTI will continue to generate profitable growth, deliver positive free cash flow and maintain a strong balance sheet through disciplined capital allocation. We believe in the long-term cannabis market opportunity and believe GTI’s valuation will eventually reconnect with growth fundamentals […] GTI remains our top cannabis pick.”Hickey’s $14 price target supports his Buy rating, and suggests a 56% growth potential this year. (To watch Hickey’s track record, click here)All in all, Green Thumb has a unanimous consensus view, a Strong Buy based on 7 positive analyst reviews. Shares are affordably priced at $10.27, and the average price target of $17.16 is indicative of a robust 71% upside in the next 12 months. (See Green Thumb stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

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