I continue to think U.S. stock prices are on the verge of a short, sharp, shock here.
Subscribe to see the rest of this post.
Weekly Update
Underway
The May swoon forecast by my Solunar Model is officially underway.
Loaded VIX
The Failing Japanese Printing Press
Our clients have been following the close correlation between inflating central bank balance sheets and asset prices. Here's a few charts with some interesting implications.
click chart to enlarge
For some time now, the S&P 500 has correlated closely with the EURJPY exchange rate. The two have danced hand in hand, although note that in the January stock correction, the EURJPY headed lower before stocks turned down.
click chart to enlarge
In turn, that EURJPY rate has a long-term fit with the ration of Japanese central bank assets divided by European central bank assets. This relationship makes sense. If the Japanese are printing more than the Europeans, their currency will fall relative to the Europeans.
The chart that brings it all together is below for subscribers.