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This note was originally published at 8am on September 26, 2011. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-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 $1630-1782, $79.19-85.91, and 1121-1144, respectively.

Bes of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer

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