Stocks versus commodities growing divergence....
An examination of the chart below shows a growing divergence between stocks and commodities. Or maybe we can call it central bank induced assets price rallies versus real growth asset price rallies. Can this divergence continue? Yes. But we don't expect it to continue much longer. We may be old fashioned, but we believe the "E" part of the P/E or Price-to-Earnings ratio must be tethered to the real world. Some analysts suggest P/E's are still quite reasonable. This assumes "E" continues to grow. As indicated in today's Currency Currents, trade numbers point to a slowdown in the global economy. For now, the commodities side of our portfolio (where we are short) is holding up just fine. Today is a great example of divergence, as stocks are sharply higher, the Dow is up 111 points, while gold is down $27.5 [No longer is it pure risk on versus risk off]
Market Vitals | 18 December 2012 [http://www.blackswantrading.com/storage/market-vitals/121812_mv_real%20vs%20cb%20divergence.pdf] ~ [http://www.blackswantrading.com/storage/market-vitals/121812_mv_real%20vs%20cb%20divergence.pdf] ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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