The VIX closed at 9.17 yesterday and as the ES is pushing higher in early morning trading I am starting to wonder if we are getting close to breaking the old record of 8.89 which was registered on December 22, 1993. Which is probably the clickbait you’re finding plastered all over the financial MSM right now in eager anticipation of a new ‘record low’. Which however all by itself is relatively meaningless. Fortunately here at Evil Speculator we always pop open the hood and look at what’s really driving things – it’s time to crunch some numbers!
Alright, it’s time to talk about the ole’ greenback. Which, in case you haven’t been paying attention whilst increasing your odds of skin cancer at some overpriced beach resort, has been dropping rather precipitously since the beginning of the year. You may counter that a correction was long overdue since the Dollar has had a pretty good run over the past two years. And you would be technically correct – in relative terms compared with everything else the Dollar has been on a solid run since mid 2014. But in real purchasing power today’s Dollar is a whopping 27% weaker than when Will Smith’s big hit was hitting the charts in the summer of 2002.
We are floating in the midst of the summer doldrums and I don’t really see anything salient I haven’t covered over the recent past. The greenback continues to get hammered and as our collective purchasing power is sinking steadily it implicitly lifts the relative value of Dollar denominated assets since holding cash exposes you to the receiving end of Yellen’s fiat currency death stick.
There doesn’t seem to be any bottom for the Dollar right now. Suffice it to say that I am not amused and the way this is going I’ll have to raise my Gold subscriptions from $49 to $49,000 by the end of the summer. Better lock in that low rate before we hit hyperinflation and wind up shopping with wheelbarrows full of credit cards! Anyway, if you’re elated about your long positions in pretty much anything but Dollar denominated FX pairs right now then think again, because all you’re really doing is to offset what you are rapidly losing in purchasing power.