I believe the Dollar has bottomed for the short term and the US Equity Markets have topped (for the long term). There is still inverse correlation between Dollar/US Equities. And likely this will come with pronouncements of deflation.
As long as there was and continues to be a Federal Reserve, no outcome has ever been deflationary nor will deflation be in our future.
Deflation is monetary deflation. The rise or fall of the price of asset classes is NOT inflationary or deflationary. Moreover, the falling price of the most visible asset class (US Equities) is NOT evidence of past or future deflation.
Because the outcome is and will continue to be inflationary. Many may believe that this will help US Equities to rise in nominal terms. A very incorrect assumption. Inflation will help asset classes with poor fundamentals (US Equities) from falling as far as they otherwise would. But fall they will. Which is a demand issue not a deflation issue.
By and large, there is **far more** positive correlation between the Dollar and Equities than there is inverse correlation. They both go up and down together as evidenced in the chart above.
However, many, including myself, have observed that the "weak dollar" is currently fueling the the equity rally right now. So why the discrepancy?
Because we are still in the aftermath of the Greatest Deleveraging Event in History (2008)!
During the meltdown of 2008, everything was sold / redeemed for the relative "safety" (used exceptionally loosely) of Treasuries: shares in hedge funds, commodities,
In what was painfully obvious to everyone with half a brain months ago (see here) Japan's desperate gambit at reflating would backfire massively by sending energy prices soaring in a world in which Japan no longer has access to internally producer, nuclear power plants and is forced to import all of its energy from abroad. For a glimpse of the horrors awaiting Japan's utilities and those consumers lucky enough to have electricity in their homes, here is a chart of Japanese LNG costs ex...
As if sniffing at the threat the ongoing collapse in JGBs, culminated by Toyota pulling a bond issue on soaring yields, which forced even JPM to come out with an ominously titled piece called the "VaR Shock" driven by the epic plunge in the Yen, Japan's economy minister Akira Amari has hit the wires saying "the yen's excessive strength has been largely "corrected," and further weakness could be harmful, Japan's economy minister said Sunday, suggesting the Japanese government may be happy with the currency's current level....
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Note from dshort: In response to a special request and in light of the strong market performance in the S&P 500 and meteoric rise in the Nikkei 225, I've updated my Mega-Bear weekly chart series through Friday's close.
It's time again for an update of our "Real" Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.
The chart below is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the "real" all-time high for the S&P 500 occurred in March 2000.
Global X, the New York-based ETF sponsor known for its unique lineup of commodities and emerging markets funds, announced six of its ETFs will be reverse split, including three gold mining-related funds.
The $29.4 million Global X Gold Explorers ETF (NYSE: GLDX) will undergo a 1-for-4 reverse split while the $2.78 million Global X Junior Miners ETF (NYSE: JUNR) will see a 1-for-3 reverse split. The Global X Pure Gold Miners ETF (NYSE: ...
It seems that every Tuesday in 2013 since January 8 has been positive on the Dow. And this past Tuesday was no exception. Now that sounds like a trend to put money on -- buy the SPDR Dow Jones Industrial Average ETF (DIA) at the close each Monday and close out the position late on Tuesday.
The Dow and S&P 500 both hit new all-time highs once again on Wednesday, while the Nasdaq hit its highest level since November 2000. The “risk on” allocation of new investment capital into cyclicals continues, although Wednesday saw leadership from defensive sectors Consumer Staples, Utilities, and Telecom, along with Financials. Nevertheless, ConvergEx reports that the average correlation of the ten S&P business sectors to the overall index averaged 82% last month. While that is below the 86% averag...
BMY - Bristol-Myers Squibb Co. – Shares in drug maker, Bristol-Myers Squibb Co., are ripping higher today, up 6.5% at $44.94, the highest level in more than a decade, ahead of the release of the American Society of Clinical Oncology (ASCO) 2013 Annual Meeting abstracts tonight. The ASCO Annual Meeting begins on May 31st in Chicago. Options on BMY are far more active than usual today, with overall volume topping 64,000 contracts by 12:25 p.m. ET, versus average daily volume of around 11,400 c...
We are starting to see some very extreme readings on our monthly and weekly index charts since there has been no correction this year. I posted below first the monthly chart of the S&P 500 going back 15 years showing bollinger bands – rarely do we get above the upper one, and never have we been this far above. Then below that I posted (with 4 charts of 4 years each) the weekly data and you can see we are at a rare time we are above the weekly bollinger band as well. This non stop rally is getting very historical.
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Stock market posts another record setting week, but the big news came after Friday’s close.
Courtesy of NASA
The stock market put on another record setting show with the Dow Jones Industrial Average (NYSEARCA:DIA) closing at a record high 15,118 and the S&P 500 (NYSEARCA:SPY) closing at 1633.70, another all time closing high.
For the week, the Dow Jones Industrial Average (NYSEARCA:DIA) gained 1%, the S&P 500 (NYSEARCA:SPY) climbed 1.2%, the Nasdaq Composite (NYSEARCA:...
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Well, well, well....it is good to know that there are others in the scientific arena who believed that YMI Bioscience's data (cough - Gilead) is a better drug than Incyte's Jakafi. Now, the definitive data are still unknown, but there was enough evidence from a Phase 2 trial to take a small risk for a huge reward. So, let's forget about Apple (AAPL), and do nothing but biotechs from now until Congress passes universal health care coverage for prescriptions....and drive the prices down so that research and development is no longer feasible to conduct in the US. Even Seattle Genetics (SGEN) has been on a tear as of late...
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(
