POSITION: Long US Dollar (UUP)
After hearing today’s US Federal reserve proclamations of forecasting faith, we have no change to our view that Ben Bernanke will remain in a box for the foreseeable future.
Being in a box (for those of you central planning fans who have never tried it at home) means that you can’t cut or raise interest rates. In The Bernank’s case, we continue to believe that he cannot yet fear-monger for a QE3.
Ironically, but not surprisingly, the reason for this is King Dollar itself. As you can see in the charts below, as is the case with making most Big Macro calls, it’s the slope of the lines that matters. Less Big Government Intervention (money printing) = Stronger US Dollar.
Stronger Dollar = Stronger US Consumption.
Stronger Consumption in Q3/Q4 means Bernanke can’t cut (US Consumption = 71% of US GDP).
Pictures tell a 1,000 words. Keynesian Politicians, take notes.
Keith R. McCullough
Chief Executive Officer