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“Early in life I had noticed that no event is ever correctly reported in a newspaper.”

-George Orwell

That’s an important observation. Especially since most “newspapers” in this day and age lean left on economic and market matters, someone either needs to show us the truth, or we need to find it for ourselves.

Since I’m not much of a socialist, I had no exposure to Orwell’s writings until my English professor @Yale had me read The Road To Wigan Pier. It’s a 1937 non-fiction book and it resonated with me as it documented living his blue collared life in northern England.

“Orwellian” ideals resonated with many during a depression. My 1970s-1980s northern Canadian life wasn’t depressing. We didn’t have Ferraris and beg for central planning. We didn’t consider ourselves part of a “class” either. We just worked hard and lived.

Crony Crashalists - z hock

Back to the Global Macro Grind

Fast forward 8 decades and wow have things changed. Maybe if I moved my family back to Thunder Bay, Ontario I’d feel differently. But the probability of that happening is low. And the probability of my having to deal with socialism in America is rising.

On that rate of change score, here’s a fascinating study that one of our sharpest clients sent me earlier this week titled “One Third of Millenials View Socialism Favorably.” 

The bigger takeaway for me was that only 39% of Millenials viewed American Capitalism favorably.

Put another way (and who knows if this article is true to begin with), it’s probably safe to say that most Millenials don’t know what the difference between socialism and capitalism is anyway. That’s just sad.

But, given the socialization of what used to be free-market risks and the crony-crashalism you see in US markets (and the manic media that promotes it) every day, do you blame our youngest generation for being confused?

What kind of example are we providing them when we have gong-shows like Valeant Pharmaceutical (VRX) crashing yesterday?

Gonger? Yes. How else would you describe something like this:

  1. A really “smart” management team levers up a company and pitches financial engineering to Wall Street
  2. “Activist” rich-boy-wonder Bill Ackman calls Valeant the next “Berkshire Hathaway” and takes a 20-30% (?) position
  3. Stock crashes (on fundamentals) and Ackman pumps to CNBC that he bought another “2 million shares”

And the stock bounces +10% … for an hour.

2 million shares X $100 stock (was at $260/share 2 months ago) = $200 million dollars X 10% = $20M/hr for Ackman

And then CNBC runs the Valeant (VRX) view that someone (not Ackman) was “manipulating the stock”?

Oh great. This must be the “capitalism” (or hourly wage inflation?) that self-avowed socialists like Bernie Sanders are disgusted with. Being a free-market capitalist, who believes in a meritocracy (as opposed to preferential treatment for the “elite”), I am too.

Now that I got that off my chest, let’s pivot to the newsiest Global Macro event of the day – the European Central Market Planning meeting in Malta.

Yes. Malta – as in the gorgeous southern European island in the Mediterranean Sea. God’s visible socialist hand must have had this venue very much in mind when he was thinking of putting these people on earth to save us from the “capitalists.”

  1. EURO – vs. USD is trading flat day/day at $1.13 and will need a big time Draghi Devaluation event to break $1.11
  2. European Bond Yields are trading flat to up this morning in anticipation that Draghi may not deliver the #cowbell
  3. European Stocks are trading side-ways as they await the next central plan

Great. Isn’t this just great?

I really have nothing else to tell you this morning (hence the socialist/capitalist diatribe). Nope, sorry. I wasn’t living large at a tiki bar on a Maltese beach last night getting inside info on what the ECB will say today. So I have no “edge.”

Instead, I’ll be back to you after the newsy event as that’s all we non-crony-crashalists of the gridiron can do.

Our immediate-term Global Macro Risk Ranges are now (with our intermediate-term TREND research views in brackets):

UST 10yr Yield 1.98-2.09% (bearish)

SPX 1 (bearish)
RUT 1131--1158 (bearish)
DAX 98 (bearish)
VIX 14.74-20.22 (bullish)
USD 94.06-95.45 (neutral)
EUR/USD 1.12-1.14 (neutral)
YEN 118.55-120.90 (bullish)
Oil (WTI) 44.06-46.90 (neutral)

Nat Gas 2.36-2.55 (bearish)

Gold 1150-1190 (bullish)
Copper 2.30-2.40 (bearish)

Best of luck out there today,


Keith R. McCullough
Chief Executive Officer

Crony Crashalists - 10.22.15 EL chart