SKEW Has Moderated Somewhat, But Remains Elevated


While the CBOE SKEW Index has fallen back somewhat from highs last fall (see our comment here), it remains quite elevated– both relative to history and on an absolute basis.  Indeed, the further the index rises above 100, the higher the probability of ’outlier returns’.  For a full description of the indicator’s profile, see here.

The Strong USD Is Negatively Impacting US Trade


Exports have been a solid contributor to US GDP growth for the last few years, while consumption and residential investment have been more restrained.  Recently, with consumption firming and likely to improve further from the tail-wind of lower oil prices, and exports faltering, it appears the drivers of the US economy are trading places.

USD and Purchasing Power Parity


We mentioned yesterday that the US dollar is again breaking out and that tends to be negative for most stocks around the world. Today, we thought we would continue to look at US dollar strength. The nominal trade-weighted dollar index by major currencies is again very close to breaking out to 11+ year highs.