On May 10 the S&P started to correct while the USD/GOLD continued their inverse relationship. So is the S&P 500 correction simply a correction or will there be a nice retracement with continued strength in the reflation trade? Or is this just a correction in the deflation trade? As Peter Schiff says the indices could move higher but relative to gold they could move lower (inflation hedge). We'll see if cost/job cuts relative to revenues can prop up EBITDA in this environment, at least that's what the market is hoping. Lets also not forget that a lower dollar will make dollar denominated overseas earnings higher and could boost exports, if they are still buying our sh*.
News of interest:
China stuck in ‘dollar trap’ (FT.com)
Goods Orders, Home Sales Preview (Bloomberg)