[cppene]

Since the EUR peaked on October 22, the MSCI world index is down 4.4% in local currency terms, the US S&P is down 5%, the euro zone S&P is down 6.8%, and the Nikkei is down 4.7%. Investment grade CDS are up 9bp and high yield 67bp; EUR/USD 3mth vol is up 2 vols; and the VIX has moved from 20.7 to 29.8. So policymaker wishes for a stronger dollar have been met, but they may not be enjoying the satisfaction they expected from it. We do not believe that causality runs from strong dollar to weakness in these other markets, but it is often easy to ignore that USD weakness this year has been associated with much better outcomes for asset markets and economic confidence than USD strength.