Looks Like 1 Of These Assets Is Not Telling The Truth
Chris Kimble | Feb 07, 2020 03:02PM ET
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Historically, stocks, yields and copper often trend in the same direction. But unless it's different this time, one asset(s) is way out of whack.
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This chart looks at the S&P 500, copper and the yield on the 10-year note over the past 5 years.
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From late 2015 until late 2018, correlations between the three were pretty decent, especially at the 2016 lows.
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A big correlation change has taken place since December of 2018. Since then, the S&P has rallied while yields and copper have experienced declines, creating one of the largest spreads between the three in quite some time.
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This historically large spread should narrow as the odds are low that it will continue for months to come.
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The billion-dollar question is this; which asset(s) will play the biggest game of catch-up? Are stocks overextended or has copper/yields declined way more than they should have?
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