US stocks: Fear & Loathing

Global equities are having a bountiful spring as surging dollar and EuroQE provides the fertilizer for all these green shoots.

Here in the US equity direction flow and volatility are the order of each day, since there is little correlation.

Greenback strength alone does not point to a strong open or weak one. The disconnect between dollar commodities and dollar strength also appear to be at a disconnect from earlier this year.

As I have pointed out, the Fed appears painted into a corner on rate rise this year. Fear of deflation and recession are closer than growth and inflation. I could point to all the indicators I have earlier  cited like retail sales and personal credit use, but you can go back and take a look.

So what’s up with the US equities market?

Well, one thing is certain, the Fed is still pushing investors into stocks in search for return. And despite protestations by Fed governors, the fear of a rate rise is not in investors thoughts right now.

Secondly, dollar strength while a drag on US multinational earnings, is bringing some of the EuroQE ashore as a hedge against EU collapse. The Austrian situation may be as critical as Greece with a bigger downside for Germany.

So as for the last year, the US stock run up, while helpful to 401(k)s, is not about prosperity, but further desperation for a safe harbor in a growing global tempest.

Look at China’s dismal trade numbers released yesterday to further the fear trade.

 

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