Below is a brief excerpt transcribed from Monday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough.
Let’s talk Commodities.
Commodities' inverse correlation to the U.S. Dollar is massive in Quad 3. See the bright red -0.72 on the chart below? That is the inverse correlation on a trending basis against the Dollar. It’s doing the opposite of what the Dollar does.
This is the next phase of our long Commodities call. Long commodities is a direct function of the Fed being behind the curve while the data continues to slow.
What the market is really telling you in currency space (and the short end of the curve last week) is that the Fed is going to have to go incrementally dovish.
Pay attention, observe the cycle, and learn.