World stock markets, Forex, and a crash?

Who's done much analysis on the large equities markets and forex? I suppose futures or anything else too. I'm interested in the correlation between the direction of them. Has anyone noticed a reliable leading indication? Or is this one of those things no one talks about?

Sure, make me do all the work!

I'm of the opinion that by the end of October, we'll see a significant pullback on the US equities markets and the world in general. Probably led by the US, but maybe triggered overseas.

Assuming a relative drop in the comprable pairs , what would a drop in the DJIA to, say around, 9000 like do to the different pairs?

Is this worth investigating? Suggestions on how'd you approach it?

The answer is “it depends”.

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It probably wouldn’t mean a hill of beans to the currency markets if the DJIA dropped to zero. The lion’s share of any countries equity investors are domestic. The more important question is “why did the stock market tank”?

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A countries bond markets are vastly more important and anything that acts to change prices in yield will affect currencies. So if the stock market tanks because of weakness in the <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:country-region w:st="on"><st1lace w:st="on">US</st1lace></st1:country-region> economy, then bond yields will be dropping as well. In the very short run it might be dollar supportive as foreigners lock in high yields with an eye toward price appreciation. As yields start ticking down, those flows will dry up and eventually reverse as profit repatriation kicks in.

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There are millions of other scenarios depending on how you answer that question. Let me know what your thinking will be the cause and I’ll give you my take on how the different markets will be affected…

Ah, that makes sense.

I think the economic reports, some of which have been way worse than forecast, are good signs for a slowing economy. I don't think the increased transportation costs have been fully factored by the directly affected companies yet, much less had their effect thoroughly reflected in the costs of goods and absorbed by the consumer.

I don't think we've seen bottom in the housing market either and the accompanying slow blow that will cause.

Finally the typical October slide. I may have been premature in my earlier statement though, the 9000 may not come til next year. Or not at all. I think it may hold at 10,000, this year at least.

well you also have to remember (i think), that a currency's value is not purely determined by a central bank's interest rates or the T-note yield... it also represents the interest and faith investors have in the country. for example if the US economy were to crash due to inflation, and the Fed raised rates a lot... i'm not so sure if the dollar would skyrocket. that in mind, if the DJIA sunk (significantly), that probably means problems for the american economy...the dollar would probably weaken as well.

2 cents from a high schooler... take it for what its worth