Gold Spot / U.S. DollarEducation
What is the most widely accepted correlation in the markets?
What Is Intermarket Analysis?
Intermarket analysis is a method of analyzing markets by examining the correlations between different asset classes. In other words, what happens in one market could, and probably does affect other markets, so a study of the relationship(s) could prove to be beneficial to the trader. (Investopedia)
* 100% against efficient market theory..!
A simple correlation study is the easiest type of Intermarket analysis to perform, where results range from -1.0 (perfect negative correlation) to +1.0 (perfect positive correlation).
The most widely accepted correlation is the inverse correlation between stock prices and interest rates, which postulates that as interest rates go up, stock prices go lower, and vice versa. (Investopedia)
Please read this once again:
The most widely accepted correlation is the inverse correlation between stock prices and interest rates, which postulates that as interest rates go up, stock prices go lower, and vice versa.
What is the main Job of the FED?
The Federal Reserve sets U.S. monetary policy to promote maximum employment and stable prices in the U.S. economy.
(federalreserve.gov)
What is the current situation?
1- Unemployment lowest level in the past 40 years and 2 positions are available to any job seeker in the US.
2-Inflation at the highest level in the past 40 years
So,
FED will keep increasing the rates until controlling the inflation and the job market's negative reaction (possibly due to recession)!
and
Market Correction will continue as collateral damage!
What has been considered a bailout in 2008, was actually FED's plan to rescue the economy from a negative spiral, however, those who created that mess benefitted the most ..!
This time the narrative is different, how?
This time FED has started Quantitative Tightening (QT), the exact opposite of what they did in 2009(QE)..!
This means No bailout this time..!
There will be no free money for Speculative assets which could lead to significant market P/E correction..!
You can compare the old school hedges against inflation (energy, Gold) vs NASDAQ Composite and Cryptocurrency market
While oil is up +38% and gold is up +2% in the past trading year, NASDAQ Composite and Crypto markets are down -23% and -65% respectively!
Best,
Dr . Moshkelgosha M.D
DISCLAIMER
I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my posts is appropriate for you or anyone else. By using this site, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site.
Reference:
https://www.investopedia.com/terms/i/intermarketanalysis.asp
Intermarket analysis is a method of analyzing markets by examining the correlations between different asset classes. In other words, what happens in one market could, and probably does affect other markets, so a study of the relationship(s) could prove to be beneficial to the trader. (Investopedia)
* 100% against efficient market theory..!
A simple correlation study is the easiest type of Intermarket analysis to perform, where results range from -1.0 (perfect negative correlation) to +1.0 (perfect positive correlation).
The most widely accepted correlation is the inverse correlation between stock prices and interest rates, which postulates that as interest rates go up, stock prices go lower, and vice versa. (Investopedia)
Please read this once again:
The most widely accepted correlation is the inverse correlation between stock prices and interest rates, which postulates that as interest rates go up, stock prices go lower, and vice versa.
What is the main Job of the FED?
The Federal Reserve sets U.S. monetary policy to promote maximum employment and stable prices in the U.S. economy.
(federalreserve.gov)
What is the current situation?
1- Unemployment lowest level in the past 40 years and 2 positions are available to any job seeker in the US.
2-Inflation at the highest level in the past 40 years
So,
FED will keep increasing the rates until controlling the inflation and the job market's negative reaction (possibly due to recession)!
and
Market Correction will continue as collateral damage!
What has been considered a bailout in 2008, was actually FED's plan to rescue the economy from a negative spiral, however, those who created that mess benefitted the most ..!
This time the narrative is different, how?
This time FED has started Quantitative Tightening (QT), the exact opposite of what they did in 2009(QE)..!
This means No bailout this time..!
There will be no free money for Speculative assets which could lead to significant market P/E correction..!
You can compare the old school hedges against inflation (energy, Gold) vs NASDAQ Composite and Cryptocurrency market
While oil is up +38% and gold is up +2% in the past trading year, NASDAQ Composite and Crypto markets are down -23% and -65% respectively!
Best,
Dr . Moshkelgosha M.D
DISCLAIMER
I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my posts is appropriate for you or anyone else. By using this site, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site.
Reference:
https://www.investopedia.com/terms/i/intermarketanalysis.asp
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