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This morning’s jobless claims number came in better both on a week over week basis and versus expectations (see chart).

Why isn’t this US stock market bullish?

Because what the US stock market needs is worse than expected economic data. I know, its perverse, but it’s reality – until the economic data is so horrendous that the US Dollar stops its ascent, the US stock market is going to go nowhere but down. The most important inverse relationship in macro in 2009 has been US$ UP, SP500 DOWN.

Got government stimulus? Got socialization? You bet your Madoff we do… but that’s the problem. What we don’t have is a government that just lets this free market price assets at an expedited pace to their market clearing price. So until the free market forces deteriorate to an unthinkable degree, creating a selloff in the confidence in the US currency, we’ll keep moving along in this government sponsored slow motion train wreck (otherwise known as asset deflation).

President Obama,

Please stop listening to Keynesian “economists”, and find someone in your crowded West Wing of yes men that knows something about Irving Fisher.

It’s time to break the buck,
KM

Keith R. McCullough
CEO & Chief Investment Officer