Trashing What's Left Of The Dollar

Takeaway: Janet Yellen looks set to launch a new round of aggressive doveishness. We think this risks trashing what’s left of the dollar.

Trashing What's Left Of The Dollar - yello

The Fed’s ongoing policy to trash the dollar has had the effect of inflating prices of things priced in dollars.  This policy has most notably sent the equities markets through the roof.  But remember that actual economic growth is “priced” in real terms.  A factory that increases productivity by 2% a year can not “put it on margin” to turn that into a 4%-10% annual gain.  Indeed, we are suffering the aftermath of an economy whose growth over more than a generation was increasingly driven by borrowing, borrowing, borrowing.

 

It appears that the Fed really believes it is helping the economy by guaranteeing that the prices of mortgage-backed bonds remain unrealistically high – and using our money to do so.  What is really going on is that asset prices are diverging from fundamental asset values, to the extent that markets risk becoming completely untethered from reality.  Into this morass treads Janet Yellen, who looks set to launch a new round of aggressive doveishness.  We think this risks trashing what’s left of the dollar.

 

Maybe shutting down the government wasn’t such a bad idea.

 

This is an excerpt from a Forbes op-ed written by Hedgeye Managing Director Moshe Silver. Click here to read it in its entirety. 

 


Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more