ETF Notes

On Friday morning in this column, I noted that there was a bearish inflection potential brewing if the dollar rallied off the open. It did.In fact, it has kept on trucking higher this morning. And it has people confused.I predicted it because it made sense as an early positioning canary in the coal mine of the global cycle. The US economy does not exist in a vacuum. The alternative is that it is simply following rates. But the move in the dollar has been far more dramatic than anything we have seen in rates. And the worst explanation of them all is that it is discounting a future move in rates on the basis that the US is heading into a recession with too much debt, which will drive rates higher through the recession in banana-republic style. This is pure fantasy for several reasons, not least of which is that, in such situations, the domestic currency plummets at the same time.No matter how you try to spin it, the US is not a banana republic and rates didn't rise nearly as much as the...