|3-Apr-12||Business Spectator||Entering the last hour of US trading, Wall Street shares fall on weakened FED outlook|
Weakened ? QE3 is supposed to be a bad thing, ie. economy needs help.
Which is not the case with US heading into recovery. Yet it is now perceived as a bad thing to be heading into recovery.
Markets had it easy since QE.
So the correlations are as such. Asian currencies tied to S&P 500 tied to GOLD and EUR and OIL and AUD !!!! and closely tied to 10Y UST and SILVER !!!
All one big basket.
Big changes underway. Check out the recent correlations.
And the changes.
It is clear that things are starting to unravel in a hurry. It is starting with ADXY vs 10Y UST and OIL vs the rest.
All this happening because of a few PMIs, better employment numbers and a soaring stock market with FINALLY the first Hawkish FOMC statement we have had in years.
A WALK DOWN MEMORY’S LANE
What was it like before USD became the naughty Big Bad Wolf that started this awful mess of a currency war, screwing up global balance of payments just to give itself a record debt ceiling ?
ADXY was only correlated to AUD, rather strongly. And USD was correlated (negatively) to only Gold, Silver and EUR.
ALL COMMON SENSE.
Look how it changed after QE, where bad news = good news = more QE ?
Asians became correlated with everything. USD and UST’s correlation TURNED NEGATIVE. EUR vs USTs/S&P 500 correlation TURNED POSITIVE. Even Oil Price is good for S&P 500 !!
I don’t know if things are ever going back to normal but i know its not going to be easy going ahead where to hedge a EUR short position, you just need to buy the S&P or AUD or any Asian currency out there.
Ps : Sorely tempted to switch the EUR into the USD column and pass it off as the table for the future but alas, it will not be that simple now with the rest of the world jumping onto the QE bandwagon and thinking “If Greece Can Do It, So Can I.”