Throughout the market rally, which started in early 2009, haters have argued that the whole thing is a Fed-backed ponzi scheme, and that people are only jumping into stocks because of easy money and dollar debasement, not due to any fundamental reasons.
But that argument has been obliterated in recent months, as a divergence has grown between stocks and commodities.
If stocks and commodities move together, then you can make an argument that people are just putting their money in anything but paper currency. But when they’re moving separately, that argument falls apart, because it shows that there’s another fundamental driver.
And that’s what we see in this chart.
For much of the period post-2009, stocks and oil moved together. But now oil (blue line) is weak, and stocks (red line) are making all-time highs. This move isn’t just about Fed inflation and dollar debasement, for if it were we wouldn’t see this commodity weakness.
Fed haters lose again.