NEW QUICK VIEW (@ 2020-07-28 17:21:59)
“Dollar-yen diverges from stocks for longest since 2016” is a random Bloomberg headline that just popped by. When people discuss the GFC of 2008, they mostly do so by zooming in on what happened to the stock market. To view the market situation in 2020 in the same way (stocks dropped 30% and then rebounded just as quickly) is missing the point. Instead, to understand markets today you need to focus on the US dollar. 2020 is not a story of risk aversion (the S&P bounced 40% back up while risk off assets like gold, JPY and government bonds kept up strength), but it is a story of uncertainty around the dollar. From the funding squeeze in March to worries about debasement by the Fed today. To figure out the dollar puzzle today is to figure out the markets of the rest of 2020. -LSS Quant Team
