S&P 500 divided by Gold…hmmm…it at least tells us the relative value of gold has risen dramatically compared to stocks, as we switched from the up with paper stock rally to the in with stuff commodities rally in 2000. And of course is the same image of the US dollar index over that time frame i.e. the bear market in the dollar (next chart)
Have currencies found their happy place? As of this morning when I began writing:
Currently the British pound is trading at 1.6515; on June 2 it closed at 1.6580.
Change: -65 PIPs
Currently the euro is trading around 1.4233; on June 2 it closed at 1.4305.
Change: -72 PIPs
Currently the Australian dollar is trading around 0.8308; on June 2 it closed at 0.8232.
Change: +76 PIPs
Currently the Japanese yen (USDJPY) is trading around $0.9430; on June 2 it closed at 0.9576.
Change: -146 PIPs
Currently the Canadian dollar (USDCAD) is trading around 1.0968; on June 2 it closed at 1.0812.
Change: +156
Currently the Swiss franc (USDCHF) is trading around 1.0658; on June 2 it closed at 1.0617.
Change: +41
If you’ve been watching the bonds, you likely know they have been in a tight embrace with the US stock market—stocks up in price, bond down in price (up in yield), and vice versa. But to the chagrin of inflationist, bond prices have held up well despite ongoing supply, as demand for said bonds, especially from the US itself and continued support from our friend China.
If you know the bond-stock correlation has been tight, you also probably know the dollar-stock correlation has been tight as well. It’s all pretty clear in the chart below, I think…
Ok – quick recap of yesterday ...
A bunch of noise out of UK hits the British pound hard ... ECB Axel Weber warns of “Financial Crisis: Round 2” heading for Europe ... foreign direct investment in China sinks again and Chinese equities plunge and drag down risk appetite ... the US dollar runs higher, building on Friday’s momentum ... Okay – what’s happening this morning now that the dollar has got two good days under its belt?
Honestly, I’m getting tired of these monthly jobs reports out of the US. Sure, it’s good to know the minute-by-minute direction we’re traveling ... but the onslaught of investor analysis and market volatility after the fact is enough to make me want to turn off the screens by 8:45 a.m. eastern.
If you’re reading today for our prognostication on the upcoming July Nonfarm Payrolls then I’ll tell you exactly what might happen:
