This note was originally published at 8am on November 06, 2014 for Hedgeye subscribers.
“Never believe anything, until it has officially been denied.”
For those of you who didn’t know that Cockburn was a British journalist and proponent of communism, now you know. His aforementioned quote was cited by Jim Rickards at the beginning of an excellent chapter titled “Prophesy” in The Death of Money.
BREAKING: “Bundesbank investigating whether it can block sovereign QE”
Pardon? I know. I know. What is up with the London Telegraph dropping that anti-money-printing (QE) bomb on my laptop while I was sitting pretty at the epicenter of inequality’s Social #Bubble (San Francisco) after the US stock market close last night?
Back to the Global Macro Grind…
Now I’m sure that Europe’s un-elected-central-planner-in-Chief (Draghi) will officially deny anything that remotely resembles that headline being true at today’s ECB (European Central Bank) meeting… but that’s the point.
What if the Germans have legal grounds to tell the Italian jobber to #PoundSand?
Pardon my hockey-talk, but believing anything that you hear about what the Japanese, European, and American central planning agencies can do to stock markets these days is a very dangerous premise.
What happens if:
- People (as in market expectations) don’t believe Policies To Inflate asset prices work anymore? (hint: #deflation)
- Or, maybe more importantly, that they aren’t allowed to legally execute on them anyway?
Bueller? Or is it “spoos and chartreuse” while Ed is saying that every time the “surveys” get growth wrong “QE will get the perma bulls paid” anyway?
Admittedly, as global growth slows (again), it’s getting harder and harder to keep track of what it is, precisely, that has consensus right bulled up about chasing the all-time #bubble high in the SP500.
As Rickards appropriately summarizes in the same chapter, “when it comes to betting on a sure thing, greed trumps common sense.” (The Death of Money, page 25).
In other news…
Utilities (XLU), +2.3% on the day to +22.3% YTD, led the US stock market’s no-volume charge to all-time highs yesterday. I know. Everyone nailed that and Energy (XLE) being -3.1% YTD too.
- Japan’s economic implosion finally ended the 3-day central planning rip, with the Nikkei closing -0.9%
- European Equities are doing nothing while they await the 2nd coming of the 3rd and 4th coming of Draghi
- US Equity futures are down, well, because maybe they won’t go up on the jobs report tomorrow
As for me… after spending most of the week in California, I am back in the saddle in Connecticut wondering what changed, fundamentally, since the Russell 2000 was -10% lower (120 points) less than a month ago…
Other than mostly every growth and inflation metric in our model being slower today than it was then, I guess the answer is that those who are permanently predisposed to be long of US stocks will believe almost anything, other than common sense.
Our immediate-term Global Macro Risk Ranges are now:
UST 10yr Yield 2.24-2.38%
WTI Oil 76.12-80.29
Natural Gas 3.88-4.27
Best of luck out there today,
Keith R. McCullough
Chief Executive Officer