Chart Of The Week: 2009 Year To Date SP500 vs. Gold...

On a week over week basis, gold was +7% and the SP500 was -2.1%. For 2009 Year To Date, this puts Gold +2% vs. the SP500 at -7.9%.

In reviewing this past week of price changes across global macro, the most interesting callout here is that the US Dollar has been going up at the same time gold has. A strengthening dollar has effectively hammered equity prices everywhere but in China. Meanwhile, last week at least, the early signals of “re-flation” have manifested themselves in both 10 year yields, gold, and oil (oil had a +27% move this week, and 10 yr Treasuries sold off taking 10 yr yields 30 basis points higher week over week to 2.62%).

What does all of this mean? In the face of an improving American credit and liquidity picture (narrowing TED spread, steepening yield curve, etc…), there remains a Crisis of Credibility in Foreign Currencies, large cap US Financial Stocks, and US Treasury Bonds alike.

Keith R. McCullough
CEO / Chief Investment Officer