What’s Wrong With This Picture?

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The MSCI World index is back to within 2% of an all-time high.  Meanwhile the employment to population ratio in the US is languishing at levels not seen since 1983.  In 1983, the Billboard top song was Every Breath You Take by the Police.

Gold Stocks Lead Gains

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With the price of gold up another $23 today, after surging $40 last week, gold stocks are the leaders in the MSCI World index today. Adding fuel to the move is the plunge in the USD today, stepping down by half a point so far this morning.

MSCI North America Extended

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We calculate the percentage of companies above certain moving averages (MA).  Generally, when 70-80% of companies are above a MA, stocks are overbought and when only 20-30%, are above a MA, stocks are oversold. Currently, 89% of MSCI North America companies are above the 5-day MA, 84% are above the 50-day MA.

Stronger USD or Higher Inflation Expectations?

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Over the last four years, the derived inflation expectation of 30 year US Treasury bonds have moved in tandem with US Dollar.  When the USD falls, inflation expectations rise, and when the USD rises, inflation expectations fall. Since mid-September, the US Dollar Index has fallen from over 82 to under 80.