TSX-V/TSX ratio led the disinflationary summer

Disinflation was led dutifully by the TSX-V/TSX ratio

Back on June 21 we noted that the TSX-V/TSX ratio was negatively diverging inflation expectations. That is the ratio of Canada’s speculative inflation/reflation sensitive market to its real market.

Today we confirm that the ratio was correct. Inflation was sooooo H1 2021. Here’s the updated chart.

And so it follows that if indicator ‘A’ led indicator ‘B’, might not both of these indicators lead the Teflon Don, AKA the S&P 500, which thus far holds itself together due to the market’s rotations within the sectors that populate the index (most recently back to its Tech/Growth components)?

Well, if it’s a Goldilocks situation the Don will probably remain aloft. If not, well, probably not…

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