The Big Trends Of 2015 Look Like They Are Breaking Down

|
Includes: BNO, CHN, CN, CXSE, DBO, DNO, DTO, DWTI, FCA, FXI, FXP, GCH, GXC, JFC, LMBS, MCHI, MORL, MORT, OIL, OLEM, OLO, PGJ, REM, SCO, SPY, SZO, TDF, UCO, UDN, UGA, USDU, USL, USO, UUP, UWTI, XPP, YANG, YAO, YINN, YXI
by: Hale Stewart

Throughout last year, the following data series set the tone, moving pretty much in lockstep:

  1. Oil prices went down (adjusted for seasonality).
  2. Other industrial commodities went down.
  3. The trade-weighted US dollar rose.
  4. The Chinese stock market went down.
  5. The US stock market went down.
  6. The US industrial economy went down.

Now there are some signs that the correlations are breaking apart.

While gas prices are still going down:

Industrial commodities have gone basically sideways for 3 months:

The trade-weighted US dollar recently declined, even as gas prices declined (the graph is one week delayed and inverted):

The spot price of the US dollar against major currencies has not just continued to decline, it is now only up about 1.5% YoY:

And while Chinese stock prices made a big move down and have stayed there...:

... the US stock market is no longer following:

Only about one month of divergence, so there hasn't been a decisive break - yet. But my personal view is that the "flight to safety" in US Treasuries...:

... which, just like 2012-13, has caused a downward spike in mortgage rates:

And given rise to a 5-year high in purchase mortgage applications:

This means that there has been a break in trend, and a new dynamic is emerging.

New Deal Democrat, XE.com