EurosThe data in the commonly available time series for stock prices and most economic statistics are not adjusted for any fluctuations in the exchange rate of the U.S. dollar. The series for "real" economic measures do make valuation adjustments for inflation using the CPI and PPI, but even those "real" numbers are not adjusted for the dollar's changes in value. The nominal value of the S&P 500 suggests that we have yet to see the equity markets fully discount the carnage. However, when the S&P 500 Index is adjusted for changes in the dollar as measured by the Federal Reserve Major Currency Index, it is hard not to see the blood as already flowing. The dollar-exchange-value adjusted S&P 500 is now only 10% above its low at the end of the last bear market (3/3/03). The adjusted index is down 43.2% from the bubble high (8/30/00) and, even worse, it is off 27.3% from its 12-month high on May 29th of last year and down 19.15% over the last 3 months.


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