Update on markets

The purpose of this post is to show what is happening.

So, the US $ is to collapse, so say the inflationistas, the gold bugs, the Anderson shelter types etc.

USDYet the $ index, against a generally accepted basket of currencies, has failed to collapse for over 2 years and, indeed, is rising again, from multi year support.

This is the reason why the GB£ has recently been falling – not because of anything internal to the UK.

USD-GBP1.70/72 was 20 year resistance, apart from the extreme period of 2003-2007.  As I told clients, from 1.70/72 £ could rise further 20% or fall 20% to 1.35.  Falling so far. On verra.

The £ has fallen recently due to $ strength and has broken below rising support, since February.  It seems fair to suggest the break will hold.  Next support down at 1.63.

$ strength suggests risk off and we are seeing strength in PMs – which is no surprise at all.

Also, US Treasuries, which again the inflationistas said would collapse, are having a storming year…

tlt v SPYWe have been huge bulls.

Now, at relative level to S&P of last Autumn and a little push higher and the relative price will take us back to last Summer/Spring.  Inflation?   Yeah right. #turningjapanese as I have been wont to say for over a year now whenever anyone would ask me.

Western equity markets are looking fragile right now.

The FTSE is down on 15 MONTHS AGO!

The S&P has fallen a few % and sits right on multi month support before the US opens in a couple of hours.  MACD pointing down so I’ll suggest the downturn is not over.  That, in turn, suggests it could be part of a bigger move down this Summer.

spxLook at the DAX:

DAXI make that 8% down… and broken 2 year support.

Whereas Emerging Markets – as we have written of often, positively, positively (!) soars:

eem to spyLike USTs, relative price is back to Autumn last year and looking strong, relative to S&P.

By the way, US Small Caps looking awful.

So, stick with the plan.  Could be a sizeable shakeout, this Summer, of Western share prices. Treasuries to do well in that environment as will US$ and PMs.



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