“There’s nobody taking center from me until I give it up.”
-Joe DiMaggio
That’s what Joltin’ Joe had to say about Mickey Mantle taking his position in center field for the New York Yankees in 1951. Mantle was the superstar rookie. DiMaggio was the tiring veteran. 1951 would be the last year Joe DiMaggio played center field.
That’s another quote from “The Last Boy – Mickey Mantle and The End of America’s Childhood” (Jane Leavy, page 15) and, like I do with every book I read, I dog eared the page, and wrote a personal note to myself beside the quote.
I write a lot because I like to think a lot. Writing helps me think. Whether it’s to all of you every morning or to myself in bed with my books every night – it’s just what I love to do.
Rather than rip into some tired Old Wall Street brain-trust that doesn’t want us to be successful this morning, I think my humble submission to you today should be a simple one. Be yourself. Play the game that you love. And enjoy what you do.
Thirteen years ago when I started in this business, it was my job. Ten years ago, it became a compensation mechanism to make enough money to not have to worry like many hard working and honest people do in this world.
Today, it’s not about the money. It’s about building something that I love; building something that’s successful; and building something that lasts.
I don’t doubt that Merrill Lynch founder Charles Merrill and Joe DiMaggio were some of the best players of their days. I respect their successes. I love celebrating winners wherever I can find them. But today, Merrill and DiMaggio are dead.
Today, Bank of America Merrill Lynch is setting up to fire another 10,000 people (WSJ). Today is a new day. Today is as good a time as any for Old Wall Street to Give It Up.
We need to rethink and rework this business. We need new leadership. We need to evolve. Fast. Or it will, once again, be too late.
Back to the Global Macro Grind…
Global stock markets around the world are crashing. Crash, as we defined it, is a peak-to-trough decline of 20% or more in the price of something that ticks in a short period of time. From Seoul, Korea to Frankfurt, Germany, here’s what’s really going on out there:
- KOSPI (Korea) = down -6.2% overnight and down -22% since May
- DAX (Germany) = down -3.5% this morning and down -28% since May
- CAC (France) = down -2% this morning and down -33% since February
- MIB (Italy) = down -2% this morning and down -37% since February
- XLF (US Financials) = down another -2% pre-open and down 28% since February
- XLI (US Industrials) = down another -1.5% pre-open and down 23% since April
Old Wall Street can blame Europe, blame China, or blame Canada at this point. Reality is that finger pointing is for losers and I, like most of you, am tired of watching it. It’s time for the Captains of American Accountability to step up and take charge. US Growth Slowing is as big a problem as any right now to this globally interconnected marketplace.
Need more US-centric leading indicators other than Financials and Industrials crashing?
- US CURRENCY – while the US Dollar isn’t crashing to all-time lows (yet), it’s getting pretty darn close. At $74.20 on the US Dollar Index, it’s only 3% away from its all-time lows that were established by 2 conflicted and compromised Federal Reserve Chiefs (Arthur Burns in the 1970s and Ben Bernanke, twice, since 2006).
- US TREASURIES – both 2 and 10-year US Treasury Yields are now collapsing/crashing to all-time lows. When compared to 2008 (the levels they just eclipsed on the downside), that’s saying something. And that something is not good.
- US JOBS and HOUSING – both sets of numbers yesterday (weekly jobless claims and Existing home sales for July) were bad enough in their own right. The bigger problem is expectations of how bad both jobs and housing numbers are setting up to look in August-September. Yes, these are Hedgeye forecasts – and yes, we have been right on both YTD.
I’m young, and I have plenty of character faults. I get that I have a lot to learn. But I can assure you that I am on it. I love this game. I love this country. And I think my team and I can help be the change we all want to see in our profession.
My immediate-term support and resistance ranges for Gold (immediate-term TRADE overbought this morning), Oil (we remain the bear on oil, Goldman the bull), and the SP500 (bearish) are now $1, $79.23-84.42, and 1106-1166, respectively. Our allocation to both US and European Equities in the Hedgeye Asset Allocation Model remains 0%.
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
