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Below is a brief excerpt transcribed from Monday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough |
What do you know, the dollar is down again.
That is an important thing because the dollar recently had a “up” week. There have been 2 “up” weeks for the Dollar in maybe the last 10.
One was a 0.1% move and last week was a 0.2%. You can see the little nudges on the chart below.
Now it is going to resume its bearish trend.
This is pretty much all that matters when it comes to the big stuff. Look at the inverse correlations to the U.S. Dollar this morning, which are broadening again.
As you can see, these high U.S. Dollar inverse correlations started as high in the 15 day window then slowly bled into the 30 day window. Now, "the Machine" (i.e. systematic volatility targeting and delta neutral strategies, many of which optimize based on 30 day price momentum) is spotting a developing inverse correlation in the 3 months or more window.
This is the most powerful thing: To get the market right from a macro perspective, you absolutely have to get the dollar right.
Don’t be dogmatic or thematic about these things. Just be Rate Of Change driven.
