We live in a global economy and if Europe’s banks or the Euro were to crash and burn I would say it would have a dramatic effect of equities worldwide.
RBC is asking if there is a logical reason for such a high correlation.
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I understand the correlation right now as markets seem to focus on only one type of headline at a time. I would also understand it if they stay correlated while everything crashes and burns. But if they were to leverage up and inflate their way out of the problem and equities were to rally as a result, it would be pretty freaking weird if the Euro rallied as well.
Leftcoast’
Perhaps it would be good for equities, but long term it is a bubble in itself which can not be leveraged again.
We have the luxury of printing $…the EU does not.
Short term i could see the Euro popping…longer term it would probably be a bear rally.