Risk Assets

 Commodities are coming undone the last couple of days, but the next chart is really scary.

 Right now the Central banks sort of have their hands tied because of food and energy inflation, the ISM for the US showed that companies have fewer orders and are paying more for input costs, a margin squeeze and look at how displaced commodities are right now vs the SPX, in white this is what happens when easing like QE2 comes in to the market, if we are this bad with manufacturing and gas/food inflation, can you imagine if commodities took off on another tear like 2010? This is why in my opinion, Bernie at Jackson Hole last week kicked it back to Congress, their hands are ties, another round of QE could send inflation through the roof and if we are seeing 80% of the world's manufacturing in contraction now, just imagine what easing would do. This is why I pointed out the German remarks today on bond buying causing inflation, it's very sensitive.

 Yields again, more dislocated than ever, note the last divergence and the reversion to the mean.

 The $AUD today not doing much...

 Over the last couple of months, a recent collapse in the leading indicator currency.

 Again if you didn't look at price trends and only indicators, this looks like a bear market rally, the broader, but less sharp divergence in the $AUD at the top to the left and the sharper, deeper dislocation now of a bear market rally which reverse much more quickly.

 The Euro and SPX today...

 The EUR/USD since this week's open and last Friday, we are at a level of resistance.

 As mentioned yesterday, HY Corp. Credit has made had fake moves before that reversed sharply to the downside, just several months ago we saw that, this looks very similar with a bear flag type formation in credit.

The same in High Yield Junk Credit.