INSTANT INSIGHT: The Key Implications Of Oversold U.S. Dollar

INSTANT INSIGHT: The Key Implications Of Oversold U.S. Dollar - dollar crumbled

 

Below are a number of important callouts this morning to help investors risk manage these manic macro markets.

 

Top of the list? The U.S. Dollar.

 

Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:

 

"After falling another -0.4% last week to YTD lows of -4.5%, the US Dollar Index is signaling immediate-term oversold in my model for the first time in April (the 30-day correlation b/t USD and SP500 is -0.90)."

 

U.S. Dollar oversold implications?

 

As McCullough points out in this morning's Early Look, Commodities (CRB Index) have an inverse correlation (30-day duration) of -0.88 vs. the US Dollar, which explains Oil's pop last week:

 

"WTI +8% last week (after falling -7% in the week prior) will be as important to watch as anything US Equity Market Beta this week; risk range is signaling a lower-high of $39.99/barrel as Oil Volatility (OVX) signals a higher-low of 43.14."

 

With the S&P 500 and Commodities inversely correlated to the US Dollar (-0.9), oil and equity investors are clearly begging for a “dovish” Fed.

 

That raises an important question...

 

What actually gets investors paid when the Fed goes dovish and tacitly agrees with our Macro team's U.S. #GrowthSlowing call?

 

Long Bonds (TLT)

(up +9.5% ytd versus +0.2% for S&P 500)

 

 

INSTANT INSIGHT: The Key Implications Of Oversold U.S. Dollar - tlt say cheese


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