Chart of The Week: Benny's Gold Price

Ben Bernanke is turning into the most politicized Chief that the US Federal Reserve has ever had. Given the history of the US central bank, that’s saying a lot.

 

As I type this note, Bernanke is speaking at the Economics Club of New York. It seems to be a lovely affair of world class group-thinking. In his prepared remarks, Bernanke explained away a -16% crash in the price of the US Currency the same way that his political friends in Washington have asked him to.

 

Summers/Geithner political playbook: First, establish that the US Dollar was the “safe haven” of choice during last year’s stock market crash. Then, suggest that all we are seeing is a controlled unwind of that “safe haven” global asset allocation.

 

There are 3 glaring problems with this view:

  1. This political party line is inaccurate
  2. The Chinese and Japanese disagree  
  3. It implies that the only way to strengthen the dollar is to crash the stock market

From a trust building perspective for a currency, this lacks credibility to the core. As a result, the Buck continues to Burn. And everything priced in bucks continues to REFLATE.

 

In the chart below, Matt Hedrick and I show the visual representation of our view versus that of Mr. Bernanke. This chart of GLD (the gold ETF) is marked-to-market. Bernanke’s political stardom is marked by compromise and constrain.

 

I am selling half of the 7% position in Gold (GLD) that we have in the Asset Allocation Model today. While it may be cozy for Bernanke to buddy up with his banker friends who are in bonus season in NYC, his boss will be in not so friendly Chinese confines tonight. President Obama, be prepared to be laughed at if you dismiss the Burning Buck like Bernanke just did.

 

The long term fears associated with a US Dollar Credibility Crisis are very well placed. For the immediate term TRADE, they may be peaking right here, right now. The US Dollar is hitting new YTD lows.

 

I can’t think of a Fed Chairman more equipped to have delivered the message of a pandering politician. Thanks for the Gold price, Benny.

 

Cheers,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Chart of The Week: Benny's Gold Price - GLD

 


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more