“Someone has to protect this family from the man who protects his family.”
Who is Bernanke’s family? Who is Ben Bernanke? Who is John Galt? The People getting jammed with a trashed currency and 0% rate of return on their savings accounts want to know, “yo.” And they want to know now.
Yesterday’s all-time highs in the US stock market put a bloody pit in my stomach. I will not mince words about that and why this morning. Standing up to the tyranny of an un-elected-anti-dog-eat-dog-government-man is my Canadian-American patriotic duty.
Ben, seriously. If you aren’t going to taper, ever, why? Who do you represent? Is it the people in the business of being long bonds? Or is it the government that appointed you to lead this ongoing fear-mongering campaign? Both of our leading indicators on US #GrowthAccelerating (#StrongDollar + #RatesRising) are breaking bad, again. This one is all on you.
Back to the Global Macro Grind…
“You clearly don’t know who you are talking to, so let me clue you in. I am not in danger, Skyler. I am the danger. A guy opens his door and gets shot, and you think that of me? No! I am the one who knocks!” –Walter White
That’s right Bernanke, I’m the one knocking. And it’s going to get louder if you keep this up. You can cart out everyone from PIMCO to Zervos at Jefferies to parrot whatever you think you are accomplishing here. I don’t buy it. You’re suspect.
I respect David Zervos’ penmanship and market views, so let’s break down why I think this could break bad versus what he thinks. We are two of the only consistent US stock market bulls of 2013 who have been bullish for completely different reasons:
Bernanke and the entire levered long bond bull lobby agree with Zervos. And I actually have no idea who agrees with me, which is probably why our call on US #GrowthAccelerating from 0.38% in Q412 to 2.5% now was the only one of its ilk. Our growth model called US #GrowthSlowing in October 2007 too. US Dollar Devaluation back then was my leading indicator.
So which one is it?
Oh, by the way, all of US economic and market history agrees with my view that:
1. Strengthening currency + Rising Interest Rates = Pro-Growth Signals
2. Devalued currency + Falling Interest Rates = #GrowthSlowing signals
In buckets of time, you only have to look past your nose and go beyond the #EOW (end of the world) stuff (2008) and look at the last 40 years of US economic history to understand my point. Both Reagan and Clinton understood this. Nixon/Carter (1970s) and Bush/Obama (last decade) did not. Markets can go up when growth slows; especially slow-growth styles like Gold and Bonds.
For those of you who think “the stock market going up reflects the economy, so Bernanke is nailing it”, I’ll remind you that’s a crock. Venezuela devalued its currency by 32% this year; its stock market is +312%; and its economy sucks – a Policy to Inflate via currency debauchery is not growth. It’s called inflation.
From Nero (50 AD) to 1920s Germany to whatever Chavez left in Venezuela, do not get me wrong, Zervos is quite right that keeping your government stimulated with a meth market can take you for quite a ride, yo! But, again, do not confuse the kind of move we saw yesterday with the one we saw before Bernanke decided not to taper on September 18th.
Rewinding the tapes, here’s what happened yesterday:
Is that what you want, yo? Another epic 2007 style US stock market bubble? If you do, we can go right back to reflating the Housing, Gold, Bond, Utility, Foreign Currency, etc. Bubbles. Kinder Morgan can trade at 85x earnings on that too. Rock on, yo.
So what do you want? As my man Walter White would say, “you all know exactly who I am. Say my name.” That’s right. I’m the guy who believes in fiscal conservatism, monetary tapering, a strong currency, and rising interest rates. “Now say my name.”
I’m the guy who went to net short yesterday (6 LONGS, 9 SHORTS in #RealTimeAlerts) and 54% Cash. Timestamped, yo. He’s Heisenberg. I’m going to roll with him, book gains, and protect my family and firm’s hard earned savings.
UST 10yr Yield 2.47-2.58%
Best of luck out there today,
Keith R. McCullough
Chief Executive Officer
Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.
THE MACAU METRO MONITOR, OCTOBER 23, 2013
US HOTEL BRAND TO OPEN 2-BILLION-PATACA MACAU BRANCH Macau News, Macau Business
Hollywood Roosevelt from Los Angeles is making Macau its Asian debut with an investment of two billion patacas to build a 373-room 1950s Hollywood-themed hotel next to the Macau Jockey Club in Taipa. The hotel is slated to be operational between the middle and the end of 2015. The CEO of the hotel’s management company GCP Hospitality, Christophe Vielle, said that the developer, Yoho Group would like to have a casino in the hotel. The Gaming Inspection and Coordination Bureau has received no application to run a casino there.
MORE INFORMATION ON PARADISE/SAMMY CASINO Korean Times
The construction for “Paradise City,’’ which will be a 15-minute walk away from Incheon Airport, will begin in April 2014, according to Choi Jong-hwan, CEO of Paradise Sega Sammy. “We expect the main customers of the casino to be from China. The hotel at Paradise City will accommodate 700 rooms and will be equipped with state-of-the-art business facilities and large-scale convention venues. The resort will also cater to leisure travelers, with theaters, shopping centers, spas and other facilities.
In preparation for TRIP's FQ3 2013 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.
CLICK-BASED SEGMENT - MONETIZATION RATES
BUSINESS LISTINGS/VACATION RENTALS
TODAY’S S&P 500 SET-UP – October 23, 2013
As we look at today's setup for the S&P 500, the range is 42 points or 1.80% downside to 1723 and 0.59% upside to 1765.
CREDIT/ECONOMIC MARKET LOOK:
MACRO DATA POINTS (Bloomberg Estimates):
WHAT TO WATCH:
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
The Hedgeye Macro Team
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