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Reformation Time

“There is an embarrassing lack of talent and imagination in the last generation of the technocrats.”

-Victor Davis Hanson

 

On August 9th, 2011, Hanson published a thought provoking article in the National Review titled “A Tottering Technocracy” that I highly recommend. If you want to stop the losing in this country, first you need to get the ball out of the losers’ hands. Winners win.

 

“An education-age Reformation is brewing every bit as earth-shattering as its 16th century religious counterpart… So the elites furor grows at those who seek and obtain power, exposure, and influence without the proper background, credentials, or attitude.”

-Victor Davis Hanson (National Review, August 2011)

 

Losers don’t want to hear this today, tomorrow, or the next day. Especially from me. But, for them, I guess that’s too bad isn’t it? I’m the one hiring and we’re going to do everything we can to be the change we all want to see in this country. We can do this.

 

Back to the Global Macro Grind

 

With global markets hanging on every whisper coming out of Eurocrats from Greece to Germany this morning, our economic freedoms remain in the balance.

 

What the Europeans ultimately decide to do when they pull out their multi-trillion Euro-TARP bazooka is out of our hands at this point. That said, we can make sure that the likes of Tim Geithner and his compromised and conflicted cronies don’t’ fool us the 2ndtime.

 

Remember, whatever bazooka took the US Financials up for the short-term remains a national banking embarrassment in this country for the long-term. Letting losers lose is an important principle of “free” markets because, in the end, they’ll lose anyway.

 

I can’t imagine anyone likes playing the game this way, but we have to play the game that’s in front of us. Here’s your Global Macro calendar of critical catalysts for this week: 

  1. Tuesday, Greece’s PM meets with Angela Merkel in Germany
  2. Tuesday, US Federal Reserve President Fisher discusses why he disagreed with Bernanke on implementing the Twist
  3. Wednesday, Bernanke gives a speech on “Emerging Markets” and how his policy to inflate had nothing to do with nothing
  4. Thursday, US GDP for Q211 is released (still subject to 32-81% downside revisions)
  5. Thursday, Germany’s Bundestag votes on the Euro-TARP bazooka
  6. Friday, Congress votes on another Keynesian Spending Bill (and could shut down again if they don’t pass it)
  7. Friday, is month and quarter end for all of the asset managers in our business (watch out for the customary markups) 

Why my Macro calendar of catalysts isn’t more data and fundamentally driven is a failure of our financial system’s current architecture in and of itself. If I’ve said this 1000x in the last 3 years, I have said it 10,000x - Big Government Intervention in our markets will continue to have 2 general outputs:

 

A)     Shortened Economic Cycles

B)      Amplified Market Volatility

 

And… so the “furor grows” for calling policy people out on this… the truth hurts.

 

The truth also reveals new horizons of opportunity. The best news we had last week was that a Strong Dollar can re-build a Strong America. The US Dollar Index was up another +2.5% week-over-week, taking its cumulative appreciation to +7.5% since the end of April.

 

Strong Dollar Deflates The Inflation. Period.

 

Week-over-week, here’s how that looked in the Commodity prices: 

  1. CRB Commodities Index down -8.5%
  2. Oil down -9.2%
  3. Copper down -16.5% 

Yes, the price of Gold and US Equities were down -9.6% and -6.6% respectively. But, that’s good for all of the astute buyers out there who knew Growth Slowing was going to be their 2011 investment theme. The winners are in cash and there’s nothing more a proactively prepared American likes than buying things on sale.

 

The only people who don’t want a Strong Dollar are the people who don’t get paid by a strong dollar. Follow the money and you’ll usually figure these types of things out. You’ll probably pick up some transparent and accountable friends along the way too.

 

To one of Washington/Wall Street’s finest central planners, it may sound upside down for me to say that seeing energy stocks and prices at the pump decline in unison is good for America. But that’s exactly what I want them to hear.

 

They can’t buy my vote of confidence anymore with their fleeting schemes to inflate. It’s Reformation Time in America, indeed.

 

My immediate-term support and resistance ranges for Gold, Oil, and the SP500 are now $1, $79.19-85.91, and 1121-1144, respectively.

 

Bes of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Reformation Time - Chart of the Day

 

Reformation Time - Virtual Portfolio


THE M3: HO'S SJM STAKE; CHINA SEPT CPI

The Macau Metro Monitor, September 26, 2011

 

 

STANLEY HO SELLS REMAINING STAKE IN SJM: REPORT Macau Business

Stanley Ho has liquidated his remaining 0.09% stake in SJM Holdings to his 4th wife, Angela Leong On Kei, for HK$76.4MM.

 

CHINA'S SEPT CPI FORECAST TO BE 6.0-6.2% VS 6.2% IN AUG China Securities Journal

A government researcher tells the China Securities Journal that the slight drop should mainly be attributed to the stringent monetary policy that China government has adopted.


THE HEDGEYE DAILY OUTLOOK

THE HEDGEYE DAILY OUTLOOK

 

TODAY’S S&P 500 SET-UP - September 26, 2011

 

There is no Euro-TARP bazooka this morning, but there is plenty of policy noise making – that’s what central planners doLagarde wants it; Geithner wants it; so it’s coming –time/size remains the question.

 

Two TRILLION is being floated as the number this morning and that’s in line with what we’ve been saying since our conference call on Euro-TARPing last week.  Important calendar catalysts are Merkel meeting with Greece’s PM tomorrow in Germany, and the Bundestag voting bailout size Thursday.

 

As we look at today’s set up for the S&P 500, the range is 23 points or -1.36% downside to 1121 and 0.67% upside to 1144.

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - hrmsv

 

THE HEDGEYE DAILY OUTLOOK - bpgm1

 

THE HEDGEYE DAILY OUTLOOK - hrmsp

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 800 (+3195) 
  • VOLUME: NYSE 1229.80 (-28.34%)
  • VIX:  41.25 -0.24% YTD PERFORMANCE: +132.39%
  • SPX PUT/CALL RATIO: 1.31 from 2.75 (-52.49%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 36.53
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 1.84 from 1.72     
  • YIELD CURVE: 1.52 from 1.67

 

MACRO DATA POINTS (Bloomberg Estimates):

  • 8:30 a.m.: Chicago Fed Nat Activity Index, Aug., est. (- 0.4), prior (-0.06)
  • 9:15 a.m.: Fed’s Raskin speaks on monetary policy in Washington
  • 9:30 a.m.: Fed’s Bullard speaks in New York
  • 9:30 a.m.: ECB’s Bini Smaghi speaks in New York
  • 10 a.m.: New home sales, Aug., est. 294k (down -1.3%)
  • 10:30 a.m.: Dallas Fed Manufacturing, Sept., est. (-8), prior (-11.4)
  • 11:30 a.m.: U.S. to sell $29b 3-mo. bills, $27b 6-mo. bills
  • Noon: ECB’s Weidmann speaks in Washington
  • 3 p.m.: Fed’s Kocherlakota speaks on debt panel in Chicago

 WHAT TO WATCH:

  • Finance ministers, central bankers urged European officials to intensify efforts to contain debt crisis as IMF, World Bank held annual meetings in Washington
  • Berkshire Hathaway said to increase stake in Tesco to 3.64% from 3.21%
  • Netflix, DreamWorks Animation complete streaming deal, NYT
  • Apple may have cut 4Q iPad orders by 25%, JPMorgan says, citing indications from supply-chain vendors
  • Pimco forecast advanced economies will stall over the next yr as Europe slides into a recession
  • Axis-Shield disappointed Alere hasn’t taken notice of its investors’ rebuttal of Alere’s 460p-shr offer, which “fundamentally undervalues” Axis-Shield’s prospects
  • Clorox (CLX) Carl Icahn withdrew director slate after concluding holders wouldn’t approve move

COMMODITY/GROWTH EXPECTATION

 

Deflating The Inflation remains a big theme of ours (because we are bullish on the US Dollar); in the end, this is great for Americans (bad for the stocks that, if you dropped them on your head (or foot or something) would hurt); Copper down another -1.6% this morning at 3.22/lb and has crashed alongside the price of oil by 28-29% since April.

 

THE HEDGEYE DAILY OUTLOOK - dcommv

 

MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:

  • Commodities Drop to 10-Month Low as Silver Slumps on Debt Risk
  • Gold Slides More Than Comex Margins as Investors Cover Losses
  • Raw-Materials Rout Drives Bullish Futures Down 20%: Commodities
  • LME Facing Takeover as Record Commodity Volumes Draw Bidders
  • Mongolia Seeks Bigger Stake in Rio, Ivanhoe Copper Mine
  • Oil Falls to Seven-Week Low on Bets Europe Crisis to Cut Demand
  • Investors Favor Cash Over Commodities in Dim Poll Outlook
  • Industrial Metals Tumble as Europe Debt Crisis May Curb Growth
  • Australian Precious-Metals Exchange Plans to Start Next Month
  • Spot Gold Advances for First Day in Four as Futures Rebound
  • Palm Oil Headed for First Drop in Three Years to Cut Costs
  • Monsoon Rainfall Exceeding Forecast to Boost India Crops
  • Indonesia’s Biggest Tin Producing Region May Suspend Exports
  • Armajaro Trading Moving Focus From Futures to Actual Commodities
  • Copper in Shanghai Tumbles by Daily Trading Limit
  • Oil Trades Near 6-Week Low on Bets European Crisis to Cut Demand
  • Copper Falls Below $7,000 a Ton to Lowest Since July 2010
  • Copper Has Most ‘Fundamental’ Risk to Decline, Macquarie Says
  • Palm Oil Drops on Expectations of Higher Supplies, Weak Demand

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - dcurrv

 

EUROPEAN MARKETS

 

EUROPE: trying to rally in front of the Bazooka but volume not convincing yet and DAX remains under my key TRADE line of 5439 resistance.

 

THE HEDGEYE DAILY OUTLOOK - bpem1

 

ASIAN MARKETS

 

ASIA – crashing Asian equity prices continued overnight, which is a very bearish leading indicator that A) is not new but B) is worsening at an accelerating rate; Thailand dropped -5% last night, followed by Philippines down -4.2% and Indonesia down another -3.2% (these 3 markets are in the Top 10 in the world; so part of this is mean reversion; part liquidation in EM).

 

THE HEDGEYE DAILY OUTLOOK - bpam1

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - me

 

Howard Penney

Managing Director


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This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.



THE WEEK AHEAD

The Economic Data calendar for the week of the 26th of September through the 30th is full of critical releases and events.  Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.

 

THE WEEK AHEAD - 1

THE WEEK AHEAD - 2


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