In response to last week's post on the inverse relationship between the dollar and stocks, some readers asked how the relationship between the two assets has played out on a longer term scale. The chart below highlights the performance of the S&P 500 and the US Dollar Index since 2003. In this chart, the dollar is not plotted on an inverse scale. As shown, the two charts have consistently been moving in opposite directions. As long as this trend continues, what's good for the dollar is bad for stocks.
Subscribe to Bespoke Premium or Premium Plus to receive more in-depth research from Bespoke.
Very interesting. Questions is, where is it heading next? Is the general concensus that the dollar is in for a protracted decline...and consequently stock are in for a big bull run?
Posted by: Senan | September 28, 2009 at 06:35 PM
Yeah, well that holds up pretty well since 2002, but what about the late 90s? Obviously, the dollar and stocks rose at the same time. More interesting is the types of stocks that do well when the dollar is rising and when it is falling.
Posted by: Joe Calhoun | September 28, 2009 at 07:03 PM
So we just need to keep turning our currency into toilet paper and we'll be at all time (nominal) highs. Yea money printing!
Posted by: tradeking13 | September 28, 2009 at 09:00 PM
"...consistently been moving in opposite directions"
Consistently ? What about 4th Q 07 to 1st Q 08 ? Both looked like they were moving down.
Sometimes your work can be so sloppy to call into question your accuracy.
Posted by: dave | September 29, 2009 at 02:35 AM
It would be nice to see this as several decades' worth of data.
Posted by: MRhé | September 29, 2009 at 08:53 AM
Well, one day does not make a trend, but yesterday was a stock market melt up while bucky was UP as well.
Posted by: ss | September 29, 2009 at 09:16 AM