Indicator: U.K. vs U.S. market index ratio (EWU / SPY)

Series

What is this indicator?

The FTSE 100 is "Jurassic Park." It has almost no correlation to the modern AI economy. It is Oil (Shell/BP), Mining (Rio Tinto), Tobacco (BAT), and Pharma (AstraZeneca). These are "Inelastic Goods"—people need them regardless of the economy.

There is a huge difference in yield differential (which also makes long-term comparisons irrelevant). The UK market often yields 4%+, while SPY yields 1.3%.

When SPY crashes (Tech bubble bursts), capital rotates into EWU because it is "safe" and pays you to wait.

When SPY rallies, EWU looks like "dead money."

EWU is a hedge. If a hedge fund manager thinks the AI bubble is about to pop, they go Long EWU / Short SPY.