The Illusion of Market Gains in the U.S.

Some investors in the U.S. are happy that their portfolios have gone up a bit this year. What they may not realize is that markets have gone up because the USD has sunk.

In the last 12 months or so, the stock markets in the U.S. have only gone up when the US dollar has gone down, that is the politics of reflation being employed to revive the markets.

This chart show the updated performance of a number of currencies versus the USD on a YTD basis and for the last 90 days.


(please click to enlarge)

This is very sad.

On the other hand, the real stars are the markets in those countries whose currencies have appreciated. This, for example, is clearly seen in the EWZ (Brazil) vs SPX comparison chart:



The SPX gain of 11% is not really a gain given the drop in the USD.