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A few weeks back I called the US Dollar a Ball Underwater. I have also called it a Burning Buck. Something that’s Burning Underwater is something that I have never seen in my life. Then again, I have never seen US monetary policy this politicized either!

As the Buck Burns, that Ball Underwater that creates REFLATION in anything priced in US Dollars is the US Dollar Index that Andrew Barber and I have outlined in the chart below. Since March, the US Dollar Index has crashed into the depths of waters unknown to the tune of -14%. Over the same time frame, the SP500 has reflated +54%!

The simplicity of this conclusion is what is born out of Chaos Theory. Underlying the madness of the manic media and all of the global macro data points they attempt to synthesize in the rear-view mirror is a very deep simplicity. It’s a dominating mathematical pattern that governs us all. It’s beautiful.

Today we have seen the US Dollar once again lose it’s early morning bid. As the Buck begins to Burn again, the SP500 has recouped most of her morning’s losses. This inverse correlation won’t be perpetual. Balls Underwater eventually get released to the upside. Look what happened to this chart below in the late January-early February period for a sneak preview of the same.

Keep your swimsuits on. This global macro tide pulls both ways.


Keith R. McCullough
Chief Executive Officer

Chart of The Week: Burning Underwater? - usdchart