NEW YORK ( TheStreet) -- The weak inflation data seen on Tuesday was reflective of the overall sentiment surrounding the domestic and global economy.China reported weak GDP on Monday, and gold subsequently tanked. There are many factors behind the gold freefall, but I like to think the lack of inflation to hedge as being a main driver. With the string of bad data in the U.S. -- from the underperforming nonfarm payrolls to the weak manufacturing and CPI readings -- it seems the economic picture is not improving as hoped. The Federal Reserve minutes released Tuesday show the unemployment situation continues to worry officials. Unless 200,000 becomes the norm for nonfarm payrolls, it is unlikely the Fed will takes its foot off the stimulus gas anytime soon. The lack of inflation fear can be seen across markets, and is especially apparent in intermarket charts tracking the phenomenon.
The ratio rose in stride with the SPDR S&P 500 ( SPY) upturn during late 2012, but recently has broken the trend. Many analysts have cited that the economic speed bump hit towards the end of the first quarter, and this chart is a testament to that. The chart advocates for a turn to defensive portfolio positioning, but more evidence is needed.