This note was originally published at 8am on July 05, 2013 for Hedgeye subscribers.
“The caliphs fell, and the Caesars trembled on their throne.”
#Fireworks, love’m! But Americans need to remember what fighting for their independence means. For as long as conflicted, compromised, and centralized power remains in the hands of political plunderers, there remains a credible threat to freedom.
As I watched American Independence light up the sky last night in Connecticut, I couldn’t stop thinking why this can’t all turn out the way it always has in this country. Lincoln called it “government of the people, by the people, for the people”; not for MSNBC’s politicians.
Do we have to fight for our hard earned currency, free-markets, and economic liberty? Genghis Kahn bled for this 800 years ago inasmuch as Americans did before and after 1776. “The Mongols did not find honor in fighting: they found honor in winning.” (Genghis Kahn, pg 91)
Back to the Global Macro Grind…
Despite the US stock market’s run of the mill -3-5% correction from her all-time highs, what’s really #winning in 2013?
- Short Fear
- Short #GrowthSlowing
- Short Gold, Treasuries, etc.
Shorting America’s currency and growth expectations works until it doesn’t. It worked for the last decade actually. That’s why plenty a hedge fund growth investor had the style-drift of buying Gold as politicians built the mother of all Bernanke Bubbles in bonds.
Gold and Treasuries hate growth.
If you ask Mr. and Mrs. Gold Bond for inside info on what this morning’s US Employment Report is going to look like, their answer won’t be any different than the answer their boss (Mr. Market) has been giving you since April:
- Gold and Silver -1.2 and -3.2%, respectively, this morning – and both continue to #crash (Gold -26% YTD)
- 10yr US Treasury Yields are testing 3-month highs again this morning, backing up to 2.54%
So why should you pay the caliphs and consultants in Washington such a premium for that super-secret whisper on when and how Bernanke is going to taper, when you can just build a real-time market model to front-run them?
And why, by the way, is it so bad for America (not slices of the asset management business or Federal Reserve talking head speech fees) to see Gold crashing and #RatesRising?
Higher rates and crashing Gold were pro-growth signals in 1982 inasmuch as they were again in 1993. This isn’t a new concept. It’s called a cycle. Anyone who spent their days whining for a half-decade past those two dates doesn’t run real money anyway.
Kahn once said, “there is no good in anything until it is finished” … and the reality is that if you believe in economic gravity, there will be no sustained path to US growth until central planners get out of the way and let the Dollar strengthen alongside #RatesRising.
We know why there is a constituency of Bernanke believers out there who want the opposite of what most Americans should want – they get paid to believe! Follow the money:
- They run levered-long Gold funds
- They have (levered) net long Treasury Bond positions
- They earn fees and/or advertising revenues to promote slow-growth and/or fear
Don’t blame me for that. It’s called a conflict of interest in what was consensus.
“I was not the author of this trouble; grant me strength to exact vengeance.” –Kahn (Genghis Kahn, pg 107)
And while vengeance may be a bad word for those who are being avenged, it’s also called #winning – USA style – for the rest of us who are promoting the only free-market path to prosperity and growth that US central planners from Bush to Obama haven’t yet tried.
Whether today’s jobs report “beats” or not, the timing remains ripe to avenge America’s Throne of Independence via #StrongDollar.
Our immediate-term Risk Ranges are:
UST 10yr 2.45-2.64%
Best of luck out there today and enjoy your liberties this weekend,
Keith R. McCullough
Chief Executive Officer