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The Dollar and Equities Revisited
The divergence meme that had the US well ahead in the global business cycle produced a virtuous cycle. The dollar and US stocks rallied together. However, with the dollar's appreciation spurring concern about US corporate earnings, and the negative interest rates in Europe spurring flows into equities, correlations between the dollar and equity markets has shifted again and that is one of the important themes here in Q1. The implication of these shifting correlation does not just important for hedging decisions, but also reflect changing drivers. First, the outperformance of US shares last year open a large ... (full story)