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Editor's Note: Below is an excerpt transcribed from today's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough. Click here to learn more about The Macro Show.

McCullough: Draghi Goes Dovish → It's Called 'Currency Wars' - currency wars

Keith McCullough: Let’s do the top three things in my notebook this morning. Numbers 1, 2, and 3 should be Draghi.

So Draghi comes out and he rings that cowbell. Oh baby. It was only 2 weeks ago that he wasn’t quite ringing it loud enough and he’s realized now that Powell needs to ring the cowbell aggressively tomorrow so he’s frontrunning Powell.

Now you have even the President of the United States complaining about Draghi. I don’t know if that’s a first or not and I don’t particularly care. Trump says this is unfair because Draghi is devaluing the currency and makes the Europeans more competitive. No, no, no. He’s devaluing the currency but that’s what they all do. It’s not just the European, or the Chinese. It’s the USA. We’re the ones who taught them how to do this. All of those central bankers went to U.S. schools. It’s everybody.

McCullough: It’s called the Currency War. Draghi makes that official this morning. You have the 10-year German Bund yield making a record low. That’s -30 basis points. Negative 0.31%. Even the Dutch have negative interest rates this morning. What you can see on your screen is a huge impact. Of course, Italians are leading to the downside. Remember, Draghi has far more credibility than Powell does in the U.S.

McCullough: Draghi Goes Dovish → It's Called 'Currency Wars' - cowbell

McCullough: The 10-year yield is tapping the low end of the Risk Range this morning at 2.03%-2.04%. What you don’t want to be doing today is buying more of what has been our #1 Asset Allocation on the long side which is Treasurys.

It makes sense. If growth, inflation and profits weren’t all slowing, Draghi, the Chinese and Powell wouldn’t be going dovish. It’s that simple. Maybe we’re the only firm that made the pivot accurately back in September at the cycle peak.

Is Powell going to be dovish enough tomorrow? I don’t think he can be. The data doesn’t yet support it. Don’t forget that our view on interest rate cuts, aggressive cuts, in September have to do with the pending July and August data and today is June 18th.

So if he’s not dovish enough it could be quite an event tomorrow after the levitation to lower highs on decelerating volume in high beta equities. I wouldn’t buy those. We’d be a seller of that anyway. 

McCullough: Draghi Goes Dovish → It's Called 'Currency Wars' - style factors

McCullough: Draghi Goes Dovish → It's Called 'Currency Wars' - the macro show