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This note was originally published at 8am on November 27, 2013 for Hedgeye subscribers.

“Well, there’s not a day that goes by when I don’t get up and say thank you to somebody.”

-Rod Stewart

Roderick gets it. The youngest of five kids, he wasn’t born into poverty or affluence. The 68 year old rocker from Highgate (North London) was born on my wife’s due date (pending baby #3 for us in January). And God knows, I have nothing but thanks for my family’s health and happiness as we move closer to game time.

I also wanted to take some time to thank you, our clients, for making all that we’ve set out to achieve here @Hedgeye possible. We’re going on 6 years since the founding of our firm. You’ve helped us create 50 jobs in America. For that I’m forever grateful.

With achievement comes great responsibility. Now that we have our new @HedgeyeTV studio and office space built out in Stamford, CT we’re looking forward to being the change we all want to see in both our community and profession.

Back to the Global Macro Grind

Change starts with being transparent and accountable. All great American (and Canadian) Patriots have held their government to account. While hope is not a reputational management strategy, I sincerely hope you see some of my anti-government rants in that light.

Yesterday’s declining US Consumer Confidence reading is case and point. While the US government and its un-elected @FederalReserve refuses to acknowledge this, there’s an implicit link between:

A) The Purchasing Power of The American People

B) US Consumer Confidence

In real-time economic strategy speak, we call these coincident indicators. As you can see in Christian Drake’s Chart of the Day (US Dollar vs. US Consumer Confidence going back to January, 2013), the following conclusion is also explicit:

1. The US Dollar locked in her YTD highs in the May-July period

2. US Consumer Confidence peaked in mid-July of 2013

Not only did confidence peak; now, alongside the US Dollar (down 3 weeks in a row), it’s starting to plummet. While the chart we are showing is the University of Michigan’s reading, every single US Consumer & Business Confidence survey we track looks the same:

1. US Conference Board Consumer Confidence reading for NOV = 70.4 vs 81.0 in JUL

2. University of Michigan Consumer Confidence reading for NOV = 72.0 vs 85.1 in JUL

3. NFIB Small Business Optimism reading for OCT = 91.6 vs 94.1 in JUL

In other words, as the US government signs off on this no-taper-zero%-rates-on-savings-US-Dollar-devaluation lie, the American people aren’t buying it.

Why? Because everyone who is literate in real-world economics realizes that the current @FederalReserve Policy To Inflate is only good for high income earners in America who are long of the @PIMCO Total Return fund and/or stocks, art, bubbles, etc…

Within another US Consumer Confidence data series, look at the Bloomberg Consumer Comfort readings by Income bracket:

1. INCOME $40,000-50,000 confidence reading for NOV = -45.6 vs -23.1 JUL

2. INCOME > $100,000 confidence reading for NOV = +16.9 vs 17.0 JUL

Notwithstanding the obvious (that low-income earners all have NEGATIVE confidence readings to begin with), this is a national embarrassment; especially for a US President who campaigns explicitly with class warfare words. Obama, what about the “folks?”

I didn’t grow up in a community where we assigned people to different “classes.” I’m the son of a firefighter and teacher who put two feet on the floor every morning just like everyone else. And when someone less fortunate than me needed help, it was my leadership responsibility to do so.

So I’d like to thank you again this morning for the opportunity to lead from the front. There has never been a country that has devalued its way to long-term economic prosperity. Perpetually devaluing the purchasing power of the poor (US Dollar) is wrong. And it’s our patriotic responsibility to end this never-ending-money-printing-policy before it’s too late.

Our immediate-term Global Macro Risk Ranges are now:

UST 10yr Yield 2.69-2.81%

SPX 1795-1809

VIX 11.91-13.61
USD 80.35-80.91

Brent 108.69-112.14

Gold 1226-1285

Best of luck out there today and Happy Thanksgiving to you and your loved ones,

KM

Keith R. McCullough
Chief Executive Officer

Confidence? No Thanks - cdrake

Confidence? No Thanks - Virtual Portfolio