US Dollar D-Day

“You are directed to suspend further sales of free silver.”
- John F. Kennedy (1961) 

Can you imagine Biden waking us up to headlines like that?

Nope. But since real American life US #InflationAccelerating has been one of his biggest political problems so far, why doesn’t the man wake-up from one of his naps with a “Strong Dollar, Strong America” policy?

Until covering my US Dollar short position at the US stock market’s all-time closing highs on Monday, I’ve been bearish on the US Dollar since June 2020. Now I’m @Hedgeye Neutral on it.

Personally I’d love to see an American President understand The Purchasing Power of The People concept of a strong currency. But I don’t invest in my personal love for concepts.

I do The Signals & The Quads. And, sadly, the only time I can get really bulled up on the US Dollar is when the USA is entering the US Equity & Credit market wreckage associated with #Quad4 Deflation.

Back to the Global Macro Grind…

After going from Bearish to Neutral, is the US Dollar about to breakout to the upside? A: maybe.

Do you have friends, who read whatever Macro Tourists read, who have completely missed being long of A) inflation since June of 2020 and/or B) that recent #Quad3 all-time closing SP500 high of 4479 on Monday AUG 16^th?

Sure you do. But who really cares about what they did or did not do. When it comes to A) preserving & protecting your hard earned capital and B) compounding Full Cycle Returns on that capital, you need to keep doing what you do.

After a healthy amount of time in my homeland with my family that I was quite grateful to have spent for the last few weeks, I have come back to America once again, as inspired as I’ve ever been to lead the life of a Canadian-American Capitalist!

Until the government takes that liberty away from me, I guess…

Good news: I didn’t opt to live in China and I do not plan to fly into Afghanistan anytime soon. So we’re all good and ready to roll here in America this morning. On The Question about #Quad4 Deflation, what shall I do?

1. I’ll keep doing what I am doing, staying short of #Quad4 Deflation in Japan (EWJ)
2. I’ll smile having made our 1^st stock market crash call of 2021 (short Hong Kong, EWH)
3. I’ll embrace the uncertainty about buying #Quad2 dips in Europe (again) on red yesterday

And I’ll take another step back and wonder whether or not this is yet another uniquely American Equity market panic into yet another options expiration day… and ask the fractal market gods whether this Equity Vol Spike is episodic-and-non-trending?

Answering these questions isn’t easy. If it was, you wouldn’t be spending the money and time to read this.

So, I grind, grind… and I grind through everything that is embedded within the singularity of my signaling process and I come up with my Top 3 Things (which we sent you yesterday). It takes me 15 minutes or less to summarize these every morning:

This #Quad4 Scare is not over yet – stay patient with your process (#Quad3 Longs: XLRE, XLU, and XLK were up yesterday)

1. ASIA – our 1^st #Quad4 stock market crash call ends up playing out in EWH with the Hang Seng down another -1.8% overnight, taking its Full Cycle collapse from its Quad1 Cycle Peak (in FEB) to -20.2%. Japan reported actual #Quad4 Deflation (again) at -0.2% CPI and that short Nikkei position also made lower-cycle-lows, down -1.0% overnight
2. USD – it’s another D-Day for the Dollar with a critical @Hedgeye TREND Signal level of $93.45 on the USD Index – the upside down of that is the CRB Commodities Index which tested 208 TRADE level support yesterday and held – Corn and Copper are trying to hold TREND, having broken TRADE… and both Yens and Swiss Francs are battling USD this AM too
3. VIX – if you’re asking SPY (which is only -1.6% from its all-time #Quad3 closing high on AUG 16^th) about an investable #Quad4 (vs. a 2-3 day panic), yesterday’s pre-market move in spooz was A) episodic-and-non-TRENDING and B) priced with some real panic into options expiration with an implied volatility PREMIUM of +53% vs. 30-day realized… #patience

Other than Bitcoin, Ethereum, and my crypto-linked Equities breaking out (i.e. not #Quad4), what else is there to say?

Well, if you’d like to spend more time and money on that, I’ll rant for 30 minutes straight on The Macro Show at 9AM ET @HedgeyeTV to try to coach both myself and you through my probability weighted decision making trees.

Who else is does that btw?

I don’t really care who does. I need to do what I do in order to raise my family and firm to be as prosperous as we can be. I don’t need to be directed by a US President, ye Olde Wall, or a Fed policy person to help me do that either.

I need to stay long of both patience and my #process.

Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:

UST 10yr Yield 1.20-1.40% (bearish)
UST 2yr Yield 0.19-0.26% (bullish)
SPX 4 (bullish)
RUT 2117-2213 (bearish)
NASDAQ 14,395-14,974 (bullish)
REITS (XLRE) 45.95-47.28 (bullish)
Tech (XLK) 151.91-156.15 (bullish)
Utilities (XLU) 67.35-69.91 (bullish)
Energy (XLE) 45.02-49.35 (bearish)                                              
Shanghai Comp 3 (bearish)
Nikkei 26,890-27,803 (bearish)
DAX 15,665-16,056 (bullish)
VIX 13.07-23.11 (bearish)
USD 92.20-93.69 (neutral)
USD/YEN 108.94-110.81 (neutral)
USD/CHF 0.91-0.93 (neutral)
Oil (WTI) 62.37-69.04 (bullish)
Nat Gas 3.75-4.18 (bullish)
Gold 1 (bullish)
Copper 3.92-4.30 (neutral)
Bitcoin 42,083-49,118 (bullish)

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer