[UNLOCKED] Early Look: A Courageous Vote

Editor's Note: Below is a complimentary Early Look written by Hedgeye CEO Keith McCullough this morning. Click here to learn more.


“Your heart is free – have the courage to follow it.”

-William Wallace


For many, today will not be easy. For many others, it will be one of their best. This is the path. This is life. Everyone doesn’t always get a sticker. There are winners and losers. This is democracy.


[UNLOCKED] Early Look: A Courageous Vote - Brexit cartoon 06.16.2016

Click here to watch our post-Brexit analysis from renowned European economist and market strategist Daniel Lacalle and Hedgeye CEO Keith McCullough in this morning's The Macro Show.


I realize that there were crazy people on both sides of this vote. There always are. People are crazy. But The People do have a right to vote against both the establishment of a highly-paid-political-life and being centrally planned from an office they didn’t elect.


What will the ECB and lord Draghi do next?


Will they opt for another currency devaluation? Or will they realize now that a debased currency undermines the legitimacy of the government trying to manipulate it? Will they “cut rates” from negative to negative-and-beyond? What happens to the banks?


I don’t know.


But do they? That remains The Question I have about the entire #BeliefSystem of central market-planning. That’s the question I have been asking myself ever since markets started pricing in that the probability of this not ending well was rising.


No, this is not a day for a victory lap.


Not for me. This isn’t my win. This is theirs. And don’t kid yourself – there are a lot of “they” out there who have been pounded by the confiscation of their purchasing power. That’s what’s in the value of a currency. And governments should never compromise its trust.


Do we have you positioned properly for this?


  1. Long The Long Bond (TLT)
  2. Long Gold (GLD)
  3. Short SP500 (SPY)


Yes. But, again, this is not a day to party. This is a serious day where serious leaders need to step up and have a real conversation about what it is that The People just voted for.


If Americans don’t have this public conversation, is our stock market next?


Today’s market news might be that:


  1. Japan’s stock market closed down -8%
  2. Germany’s opened down -7%
  3. Spain and Italy’s are trading down -11% (on the day)


But the real story has been one that’s been priced in sometimes slowly – and now all at once.


This is partly a story of central market-planners having the arrogance to promise the world that they can bend and smooth economic gravity and that “there is no alternative to buying stocks.”


In 17 years, I’ve worked and lived through two major US stock market crashes. Today, I’m proud to say I worked and lived through another crash in European stock markets not having to make excuses to my clients on why “no one could see this one coming.”


Macro markets did see this coming.


I know you are not the consensus. You wouldn’t be reading this if you were. If you had the courage to follow your own research and risk management process, I sincerely hope that you and all that you’ve worked for in your life has a good day.


It’ll be a great day for democracy and what’s left of our free-market liberties.


[UNLOCKED] Early Look: A Courageous Vote - asset alloc 6 24


Our immediate-term Global Macro Risk Ranges are now:


UST 10yr Yield 1.49-1.72%

SPX 2039-2113

Nikkei 14802-15918

DAX 9199-10306

VIX 16.40-30.99 
USD 93.08-95.80 
EUR/USD 1.10-1.13 
Oil (WTI) 44.79-50.72

Gold 1260-1328


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


[UNLOCKED] Early Look: A Courageous Vote - tlt

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