Still think fundamentals matter? Still believe your analysis of Free-Cash-Flow, energy policy, or P/E multiples will payoff? Think again... according to our Gavekal Capital's Factor Scoring Model, the US dollar has been the most highly correlated factor (out of 30) with the MSCI World Index over the past year (which is why we have been focusing so much of our attention on it over the past few months). It has had a 0.98 correlation with the MSCI World Index.
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Still wonder why USDJPY is so critical to stock prices? It's all about the USD flows...
And if the USD keeps strengthening, then history suggests that imported deflation comes America's way quickly...
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