Of late, there's a lot to of discussion about -- Is Quantitative Easing the Last Gasp Bubble?
In any event, and back to the greenback, take a look at the higher low (bullish) in the chart above (below those luscious legs), as well as the fledgling "W" pattern (that will confirm with a move above DXY 76), whichwould also suggest higher prices for dollar proxies. If history repeats, or even rhymes, this should serve as an asset-class headwind.
While I have you, let me say this: I've been asked a lot about what the end of QE2 might mean for the markets. My response is that the purpose of this initiative was to reflate markets such that corporate America could roll their debt and issue stock -- and that's been largely achieved (lets leave the other sides of the debt sandwich -- sovereigns above, consumers below -- out of the conversation for the time being).
That being said, I do believe that the second derivative of the end of QE2 will be a higher dollar, as everyone looks for the light at the end of the tunnel (regardless of whether of not it's affixed to the front of a train). Given the leverage in the system and the correlation of (carry trade) strategies, I do think this will matter, and that's why I've taken so much time to draw your attention to it.
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