Another extract from Diapason Commodities’ latest note, courtesy of author Sean Corrigan.
This time the S&P 500 as multiplied by the US dollar trade-weighted index:
According to Corrigan, the chart — which is set to a logarithmic scale — shows the extent to which money illusion has boosted the apparent performance of US equities. As he explains:
Strip out the effect of the sickly greenback (by multiplying by the TWI) and we see that this bust has clearly spelt doom for a three-decade uptrend; that we are both hovering dangerously at the 50% mark of that whole move and also threatening to fail at the previous 2003 low. were that to occur, it could mean a much deeper unwind of the post-Tequila bubble era range.
Related links:
The ‘QE’ stockmarket effect - FT Alphaville
The world and the dollar react to Robert Fisk - FT Alphaville
