This note was originally published at 8am this morning, November 22, 2010. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.
“I think I have a natural ability to lead."
Some people confuse a young winner’s conviction with their own insecurity. Most of those people can’t do what it is that winners repeatedly do at the highest levels of American life. We need to embrace our young Americans who have a natural ability to lead. They are our future.
Yesterday, after seeing his New York Jets blow a 16-point lead in the 4th quarter, 24-year old quarterback Mark Sanchez found himself an opportunity to be accountable. His team was trailing the Houston Texans 27-23. There were 49 seconds left on the clock. No timeouts.
He didn’t pout or point fingers. He didn’t blame depression or deflation either. He tied up his chin strap, marched the ball 72 yards down the field in 45 seconds, and stuck the ball in the end zone for the winning touchdown. Jets 30, Houston 27. That’s the kind of American leadership we can believe in.
Never mind the Pretended Patriotism and obfuscation of facts that we hear from conflicted and compromised politicians. Whether they be Irish, Greek, or American, they are embarrassing their last names. There never was a depression in this country. There will be if we continue to let a failed old-boy political network intervene in our markets.
These are early days, but last week showed continued progress. Closing up +0.54% week-over-week, the US Dollar was up for the 3rd consecutive week. As a result, the commodity inflation that’s starving the world’s middle and lower-class abated.
That’s right Mr. Protectionist, we are the world’s free-market leader until we bow down to crony-socialism. We hold the world’s reserve currency in the palm of our hand. It’s time to start wearing the Strong Dollar American jersey with some pride.
With the US Dollar up on the week, here’s what went down week-over-week:
- CRB Commodities Index = -1.7%
- Oil = -3.4%
- Volatility = -12%
For most Americans, these are good things. Playing a game of global chicken (Quantitative Guessing) with inflation isn’t.
Over the course of global economic history there’s never been a world power that’s devalued its way to prosperity. With each and every incremental government intervention attempt (printing money and incurring debt), Japanese, European, and American consumers see:
A) Shortened economic cycles
B) Amplified levels of volatility
Normal Americans who hate everything about socializing the losses of Big Auto and Big Banker may not have a sophisticated charting system to show this with a picture rather than prose, so Darius Dale will do that for you this morning in the Hedgeye Chart of The Day. Look at what the VIX (Volatility Index) has done since Ben Bernanke took over the wheel at the Fed in 2006. How’s that for upholding his said objective of “PRICE STABILITY!”
Since Bernanke pandered to the political wind and cut interest rates too early in 2007, this humble looking man has overseen both the highest and most sustained levels of US stock market volatility in American history. Maybe he looks humble when it comes to understanding real-time markets for a reason.
Thankfully, both Americans and the world are figuring this out. This is the advantage of YouTube, Twitter, and a 24-hour news cycle that is starting to hold decision makers accountable.
Better late than never: The Economist spent a very large amount of newspaper space this weekend attempting to teach people what both American and Japanese style Keynesian experiments have turned into. On page 87 of The Economist was a small but important introduction to a question Hedgeye asks every day: “Why is the Austrian explanation for the crisis so little discussed?”
While hope is not an investment process, I can only hope that America’s youth climbs ambition’s proverbial ladder of knowledge and grounds this Heli-Ben of failed academic dogma for good. The debt clock is ticking. The entire world is watching. America, like Ireland, has no more timeouts.
My immediate term support and resistance levels for the SP500 are now 1192 and 1225, respectively. If 1192 holds, that’s immediate term bullish. If it doesn’t, that’s bearish. We are neither short nor long the SP500 as of this morning’s US market open.
Best of luck out there today,
Keith R. McCullough
Chief Executive Officer