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“As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them.”
–John F. Kennedy

Every morning since I left the Carlyle Group’s hedge fund, I have woken up on a mission. My mission is to prove myself – not to them, but to me.
I want to prove myself worthy of the opportunity that this great country has provided me. Freedom of thought. Freedom of speech. These are freedoms to live by.
This American Thanksgiving is very special for my family. My wife, Laura, is expecting our second child. My son, Jack, is getting ready to skate. The highest appreciation I can give to them, is to live for them.
When I drive up 95 to New Haven every morning, I think of them. Then I express whatever I have in these arthritic hockey knuckles to you. All I have is 45 minutes of writing time, then edits. I know I’m not always the easiest person to agree with. Nor am I the easiest to always like. So, I’d like to take this brief opportunity to thank all of you.
Thank you for your time. Thank you for your patience. And, most of all,  thank you for providing me the resources to build a wonderful American firm. We have hired 34 people in the past 18 months. I live by them too.
Before I thank one more core constituency who makes every morning missive possible, I’ll take a moment to address something my Macro Team always gets asked for throughout the day - our intermediate-term TREND lines.
Here are my top 12 country levels – refreshed for this morning’s prices:
1.      SP500 = 1051 (bullish)

2.      Nasdaq = 2089 (bullish)

3.      US Financials (XLF) = $14.61 (bullish, barely)

4.      Chinas’ Shanghai Composite = 3051 (bullish)

5.      Japan’s Nikkei = 10,169 (bearish)

6.      South Korea’s KOSPI = 1626 (bearish)

7.      UK’s FTSE = 5049 (bullish)

8.      Germany’s DAX = 5563 (bullish)

9.      Russia’s RTSI = 1261 (bullish)

10.  Brazil’s Bovespa = 60,894 (bullish)

11.  Canada’s TSE = 11,161 (bullish)

12.  Australia’s All Ords Composite = 4607 (bullish)

Finally, I’d like to thank our troops.
They watch over us every night. They ensure that guys like me can run my mouth, and that gals like you can hit me back. These are the men and women that make our Thanksgivings possible. They do not “utter words”. They “live by them.”
Best of luck out there today.

VXX – iPath S&P500 Volatility With the market hitting its YTD high on 11/23 we bought volatility.

XLK – SPDR Technology We bought back our position in Tech on 11/20. Rebecca Runkle has an innovation story in Mobility and Team Macro has an M&A story in our Q4 Theme, the “Banker Bonanza”. We’re bullish on XLK on TREND (3 Months or more).

EWA – iShares Australia We remain bullish of Glenn Stevens at the RBA and how Australia is issuing its citizenry a rate of return. With growing confidence in domestic demand recovery and a commodity export complex with strategic proximity to China’s reacceleration, there are a lot of ways to win being long Australia.

XLU – SPDR Utilities We bought low beta Utilities on discount on 10/20.

GLD – SPDR Gold We bought back our long standing bullish position on gold on a down day on 9/14 with the threat of US centric stagflation heightening.   

CYB – WisdomTree Dreyfus Chinese Yuan The Yuan is a managed floating currency that trades inside a 0.5% band around the official PBOC mark versus a FX basket. Not quite pegged, not truly floating; the speculative interest in the Yuan/USD forward market has increased dramatically in recent years. We trade the ETN CYB to take exposure to this managed currency in a managed economy hoping to manage our risk as the stimulus led recovery in China dominates global trade.

TIP – iShares TIPS The iShares etf, TIP, which is 90% invested in the inflation protected sector of the US Treasury Market currently offers a compelling yield. We believe that future inflation expectations are currently mispriced and that TIPS are a efficient way to own yield on an inflation protected basis, especially in the context of our re-flation thesis.

EWJ – iShares Japan While a sweeping victory for the Democratic Party of Japan has ended over 50 years of rule by the LDP bringing some hope to voters; the new leadership  appears, if anything, to have a less developed recovery plan than their predecessors. We view Japan as something of a Ponzi Economy -with a population maintaining very high savings rate whose nest eggs allow the government to borrow at ultra low interest levels in order to execute stimulus programs designed to encourage people to save less. This cycle of internal public debt accumulation (now hovering at close to 200% of GDP) is anchored to a vicious demographic curve that leaves the Japanese economy in the long-term position of a man treading water with a bowling ball in his hands.

EWY – iShares South Korea
South Korea has joined Japan in the ominous position of broken TREND and TRADE. This is not China or Taiwan. This is an early cycle economy that we want to be short against China/Taiwan.

XLI – SPDR Industrials We shorted Industrials again on 11/9 on the up move as the US market made a lower-high.  This is the best way for us to be short the hope of a V-shaped recovery.   

EWU – iShares UK Despite areas of improvement, broader fundamentals remain shaky in the UK: government debt continues to expand, leadership in critical positions lacks, and the country’s leverage to the banking sector remains glaringly negative.  Q3 saw its GDP contract by -0.4%. Further bank stimulus and the BOE’s increase in its bond purchasing program suggest that this will not end well.

XLY – SPDR Consumer Discretionary We shorted Howard Penney’s view on Consumer Discretionary stocks on 10/30.

SHY – iShares 1-3 Year Treasury Bonds
 If you pull up a three year chart of 2-Year Treasuries you'll see the massive macro Trend of interest rates starting to move in the opposite direction. We call this chart the "Queen Mary" and its new-found positive slope means that America's cost of capital will start to go up, implying that access to capital will tighten. Yields are going to continue to make higher-highs and higher lows until consensus gets realistic.