In case you did not notice, the “deflation trade” is back in vogue today. The deflation trade is a rising US dollar, rising gold prices, rising treasuries, and falling equity markets.

Currencies

Energy

Financials

Grains

Indices

Gold, Silver, and Base Metals

This could be a one day wonder, a brief after-options-expirations affair, or a resumption of the main trend following a short-covering rally in which the S&P; rose more percentagewise in six weeks than any time since the great depression.

My belief is this is a resumption of the main deflationary trend. Time will tell.

Mike “Mish” Shedlock
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