The Beginning Of The End For The Greenback...?

In the last 2 weeks, the USD sentiment has gone from mildly bearish to extremely bearish, with the primary hits coming against the yen and the euro (the latter two being up 4% and 3% against the 'ole dollar, respectively). What's even more disturbing is that all of this is happening while the U.S. treasuries are taking hit after hit, pushing the 10-year yield above 5%. In other words, no longer are interest rate differentials of any importance for the greenback and structural considerations (current account deficit, etc.) are back in fashion. I think we are at the brink of an intense and super-violent USD correction -- much, much lower from here.

On another note, watch the SPX (S&P 500) over RTY (Russell 2000) outperformance, going forward. I think the time for the small caps is over -- they are expensive, illiquid and overbought. Their P/E ratios are astronomical when compared to the large caps cheap-as-chips valuations. I've been telling all my friends about this trade -- it is going to be a winner over the next couple of years! Watch this space.