Profanity's Wings

05/11/11 08:01AM EDT

“All hockey players are bilingual. They know English and profanity.”
-Gordie Howe

If you want to get bullish, let’s get bullish!

This morning I am going to shift my focus from Hayek to Hockey Town. Fans in Detroit, Michigan were rocking it out at the Joe Louis Arena last night as their Red Wings staved off elimination in the playoffs for Lord Stanley’s Cup.

While Mr. Hockey himself may have had a little Canadian storytelling in the aforementioned quote, I think we can give the man a break. He probably said it with a metal plate in his head. Gordie Howe played a world record 2,421 games of professional hockey at one speed – all out.

For those of you who don’t like hockey’s profanity and fighting, that’s ok – even if you preferred watching grown men tip toe on Dancing With The Stars last night, I guess I still have your attention. There’s this thing in hockey that the boys call a “Gordie Howe Hat Trick” – one goal, one assist, and one fight – and once in a while that’s what it takes to ride Profanity’s Wings to the promise land of victory.

If you’re bullish this morning, congrats. Virtually all of our longs are going up too. They tend to do that when the US Dollar goes down (our batting average on the long side of the Hedgeye Portfolio is probably unsustainable at +85.1%).

I can curse them. I can yell at them. I can call them names – no matter where I go this morning, there they are. America’s Central Planners are right back at it looking to solidify short-term political security by eroding America’s long-term credibility in financial markets.

After finally catching a short-lived short-covering bid last week, the US Dollar is down, again, every day this week.

If you’re keeping score where it matters, the market price doesn’t lie; politicians do:

  1. Week-to-date: US Dollar is down -0.5% and down for the 15th week out of the last 20.
  2. Year-to-date:  US Dollar is down -5.6% and down -8.1% since its YTD high.
  3. Obama/Geithner-to-date: US Dollar is down -15.3% (since they took office in February 2009)

This isn’t something anyone in this country should be proud of. This isn’t what I saw in the Boston Garden last week or in Detroit last night. This is a loser’s game – and it has been since Fiat Fools from France in the 1950s (Charles de Gaulle and the French Franc) to Nixon/Carter in the 1970s decided that The Inflation (via currency devaluation) was the best path to their short-term political prosperity.

But don’t worry about that. Everyone is a “long-term investor” all of a sudden, not a risk manager of long-term fiat policy cycles. Most Asian, European, and US stocks are up this morning – so are most of the inflation components embedded in them (yes, it does take the Energy sector to be up +12% for 2011 YTD to keep the SP500 up).

If you want to get bullish, let’s get bullish!

Last week after Big Alberta and I watched the Bruins pulverize the Flyers in Boston, I wrote a note titled “Ragingly Bullish Bears”, where I called out an important contrarian indicator in the weekly Investor Intelligence Bullish/Bearish Survey where the spread between Bulls and Bears widened to +36 points wide (Bulls minus Bears).

Here’s what that weekly sentiment survey did this week (on the margin, this is bullish):

  1. Bulls drop like stocks and commodities did last week (people get bearish after things go down) from 55% to 51%
  2. Bears rise up from hibernation from 16.5% (close to as asleep as they can be) to 18.5% this week
  3. Bull/Bear Spread tightens from +3600 basis points wide to +3250 basis points wide this week

So there you go. A Bernank Hat Trick of sorts for the Keynesian Kingdom – one more bullish data point to convince bulls to buy de-damn-dip again; one more reason for hedge funds to cover their shorts again; and one more step towards perpetuating more of The Price Volatility. Again!

All the while, Growth Is Slowing As Inflation Accelerates. Whether it’s measured from a Chinese, Indian, or Brazilian demand perspective or in supplies of copper, cotton, and Coyote fans – it’s all pretty obvious at this point. Big Government Interventions in policy structurally impair growth and confidence.

Oh, sorry – I meant to end on a bullish note.

All bulls are bilingual anyway. They know The Bernank and The Inflation.

My immediate-term support and resistance ranges for Gold, Oil, and the SP500 are now $1491-$1571, $100.26-$106.99, and 1136-1371, respectively.

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer

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