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Man who called dollar rally sees catastrophe ahead

Dollar strength will continue: Pro
Dollar strength will continue: Pro

Former hedge fund manager and Goldman Sachs alumnus Raoul Pal isn't one to shy away from making bold predictions. Back in November 2014, Pal, who is currently the publisher of the Global Macro Investor newsletter and the founder of Real Vision TV, said the U.S. dollar index was poised to make a move the likes of which hadn't been seen in "many, many years." Now, after the dollar index surged 10 percent, Pal is out with a new prediction, and it could spell trouble for global equities.

"I think the dollar will go up for another few years from here, so I'm expecting to see, by the end of this year, the dollar up maybe 20 percent," said Pal on CNBC's "Fast Money" this week.

"So we've got another 10-12 percent or so to go this year alone, and then next year something similar," he added.

If true, those predictions could have dire consequences for the global market.

According to Pal, a rapidly accelerating bull market for the dollar could lead oil prices to "come back down into the 20s" in the not-so-distant future.

"As the dollar gets stronger, global growth is falling and global export growth is falling, and that means generally that commodity prices should fall as well," he explained.

Pal said the slowdown in global growth, spurred by an ever-strengthening dollar, could have deleterious effects on one country in particular.

"Germany is the big exporting nation of Europe, and I see them slowing down," he said.

Pal explained that a weaker U.S. economy will bleed into Europe and further impact German growth.

"The first half of this year is the weakest first half since the recession" for the United States, he said. "Europe lags the U.S, so I think that won't help Germany at all because obviously the U.S. is buying less goods from Germany."

By Pal's logic, a slowdown in Germany could eventually put all of Europe in harm's way.

"I think Germany is at risk of leading Europe into a recession, which is against everybody else's opinion."