I am long on the Australian dollar, I’m lovin it. The US Dollar is down right scary right now. I think the consensus is to see the dollar rally off of its current lows, given that 80 has been the super support level for three decades, right now its hovering at 80.50. It definitely puts the stock market in context.
I found this on Minyaanville
“People seem to be pretty excited about the new all-time high in the S&P500 yesterday.
But it’s too bad that the “new high” wasn’t even a new high for the year (or the month) when we denominate the SPX in a “hard currency” like the euro (see the chart below) instead of the collapsing U.S. peso… errrr… I mean “dollar”.
This is from Barrons
There is a fundamental difference between a stock market that rises on the back of a falling currency from one that is accompanied by a rising currency, a point made here before (“Is the Dow’s Recovery a Mere Illusion?,” April 17.) A bull market can be seen as a form of money illusion, in which higher share prices can be seen as a reflection as the loss of value of the currency in which they are denominated.
As Dennis Gartman, the eponymous author of the widely read Gartman Letter, has pointed out on several occasions, the best performing stock market in the world is Zimbabwe. In the hyperinflationary hell created Robert Mugabe, stocks are bid up as the public dumps the collapsing currency in exchange for any asset that might have some residual real value.
More than in terms of other paper currencies or assets, the dollar’s decline is most evident in terms of gold. The barbarous relic gained another 0.9% based on the streetTRACKS Gold Shares exchange-traded fund, which closed at 66.02. (Each share of the ETF represents ownership of 1/10 of an ounce of gold, making its price equivalent to $660.20 an ounce.)
In other words, the Dow’s Thursday increase in real terms was about half what met the eye. And much of those gains were the result of short-covering. All of which makes the rally rather less impressive than the hyperventilating cheerleaders would have you believe.
