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Below is a brief excerpt transcribed from Thursday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough |
All investors should understand the current situation with the U.S Dollar.
The dollar is highly correlated on an inverse basis to pretty much everything at this point. This would include Gold, Commodities, Bitcoin, and the S&P 500.
You can see, for example, the USD/S&P inverse correlation has been broadening into the trend duration to around -95% (see U.S. Dollar correlation chart below).
Booking gains in almost everything works when the U.S. Dollar Index is at the low end of the @Hedgeye Risk Range.
Now, the Dollar was up yesterday. I think this is a counter-trend move in the Dollar as it was deeply oversold after almost eight weeks straight of declines.
However, be careful here.
While I think it's a counter-trend move, if the Fed and the fiscal authorities can’t get the dollar lower and lower, then Gold, Commodities, Bitcoin, the S&P – everything that's been going higher recently as the Dollar fell – are going to go down.
If you didn't know, now you know. You get the dollar right and you will get everything else right.
