“A Republic, if you can keep it.”
- Benjamin Franklin
That was Benjamin Franklin’s answer to a woman who was “waiting outside the old Pennsylvania State House on the last day of the Constitutional Convention, right after adoption.” She asked “whether the nation would be a monarchy or a republic?” -The Storm Before The Calm, pg 9
Never mind the next $2-3 TRILLION of US tax payer money that both parties are trying to sign off on for the perception of short-term political security ahead of an election…
Short-term safety in marking markets to “model”, traded for long-term free market liberty? I am sure this is going to be a tremendous deal, maybe the best ever, if that’s the America they want.
Think about what The Founders really feared – not only self-interested people, but a tyrannical government.
Today, Americans are watching unelected people impose unprecedented pressure on the value of their hard earned currency. They didn’t vote for PE Powell to print money. They didn’t elect a Goldman Guy (Mnuchin) to write “big checks” or have him use the ESF (Exchange Stabilization Fund) to do God knows what with no one looking, either.
Back to the Global Macro Grind…
For those of you who wonder about the ESF (or Plunge Protection Team), why is it that The People can’t monitor what a trading group at the US Treasury is doing with their taxes?
This was all part of the Gold Reserve Act of 1934 when the establishment parked Gold at $20/oz.
Today, Gold is up another +0.6% to $2062/oz (up +71% for Full Cycle Investors since Q418)… and it’s self-evident that both the Fed and Treasury are losing control of the narrative that their Dollar Devaluation has nothing to do with it.
Did all of the self-interested Fed Fans and socializing-of-market-cycle-risk supporters really think this Dollar story through?
A: No. But The People will. While PE Powell is a well trained lawyer who can speak in the abstract so that neither a person in Congress nor a human on Main Street can question his Technocratic brilliance…
I’m pretty sure people who are paid in US Dollars get that their cost of living is denominated in Burning Bucks.
Since 50% of The People didn’t have $1,000 on hand coming into this levered up super-late-cycle economic peak, they obviously can’t buy Tech, Treasuries, Commodities, Bitcoins, etc. to make up for their budget gap with wealth appreciation.
We can. And, we will. But that’s not an economic solution. A devalued Dollar perpetuates gross inequality.
Anyway, who really cares about this stuff anymore. Let’s go bailout some Airline execs who levered up their balance sheets to buy back stock, reduce their share count, and get paid bonuses on earnings-per-reduced-but-levered-up-shares.
As for how I’m going to try to save then make more money on it, here are your Top 3 Things:
- USD (short) – Burning Bucks remain the #1 story in Global Macro right now with the Long Commodities position (CRB Index) having an eye-popping -0.99 30-day inverse correlation to USD. SPY isn’t nearly as tasty as long Tech or QQQ or Commodities, but it’s still Bullish @Hedgeye TREND with the VIX < 26 and an inverse correlation of -0.86 on that same duration
- EUROPE (short) – doesn’t find the other side of this US Deficit & Dollar Devaluation story tasty at all – with GBP/USD ramping towards $1.32 this AM, the FTSE is down -1.3% to -4.1% in the last month – France is careening back to #crash mode (CAC -19.7% since FEB) and Spain’s stock market is a bloody mess, down -7.1% in the last month, crashing -30.7% since FEB
- 10YR (long bonds) – down from 0.55% to 0.52% - not clear how many more buying opportunities we’re going to get in Treasuries ahead of Jobless recession/depression reports, but post yesterday’s ADP disaster, we get claims this AM and the labor report tomorrow – no worries though, we have another tremendous “deal” coming that will ensure more Dollar Devaluation and economic stagflation
The die is cast but I will pray for both The People and their former republic.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.50-0.61% (bearish)
SPX 3 (bullish)
RUT 1 (bearish)
NASDAQ 10,497-11,126 (bullish)
Tech (XLK) 107.39-115.95 (bullish)
Financials (XLF) 23.37-24.59 (bearish)
Shanghai Comp 3 (bullish)
VIX 22.67-29.94 (bearish)
USD 92.46-94.30 (bearish)
EUR/USD 1.16-1.19 (bullish)
GBP/USD 1.28-1.32 (bullish)
Oil (WTI) 39.80-42.57 (bullish)
Nat Gas 1.85-2.28 (bullish)
Gold 1 (bullish)
Silver 24.60-27.97 (bullish)
Copper 2.87-2.97 (bullish)
Bitcoin 10,942-12,145 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
