Largely unnoticed the dollar has gained strength steadily. It is now at it highest level of the year, up 5% since the lows of May, supported by a sell-off in both bonds and equities as quantitative easing (QE) begins its unwinding in the US.As investors have returned from Summer holidays, September, which is historically a tough month for equities, has caused a spook for those on the long-only equity train. Equities have wobbled, falling by 5% as the dominos of the China crackdown on tech, an oil price climbing to above $80 for the first time in 3 years, the increasing nervousness of inflation nay stagflation (inflation without economic growth), tapering of QE, emerging market interest rate increases (including Brazil raising rates by a full 1%) and of course the age-old ‘wall of worry’ that the market bull has run a long way very quickly since March 23rd 2020, have all leaned over.
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