“Without continual growth and progress, such words as improvement, achievement, and success have no meaning.”
-Benjamin Franklin
Given the amount of time I spend ripping on American professional politicians, I’m happily surprised to say that the most enjoyable read I’ve had this summer was Walter Isaacson’s “Benjamin Franklin – An American Life.”
I actually picked the book up off of my wife Laura’s side of the bookshelf on a Saturday morning (my side is long Canadian hockey year in reviews - hers, American history), and she’d already flagged a page with the following passage:
“But the image he created was rooted in reality. Born and bred a member of the leather-aproned class, Franklin was, at least for most of his life, more comfortable with artisans and thinkers than with the established elite, and he was allergic to the pomp and perks of a hereditary aristocracy. From these attitudes sprang what may be Franklin’s most important vision: an American national identity based on the values and virtues of its middle class.”
Franklin’s story is All-American. It’s accessible. And it’s believable. Every one of us wants to live a successful life that has meaning. “Improvement, achievement, and success” are certainly goals that both my family and Hedgeye teams have. “Without continual growth and progress” however, we will pass up the precious opportunity of life by telling ourselves stories that we are making a difference.
That’s my problem with American government right now. That’s why I go off on it so often. Our economic growth is based on a false premise that ‘government is good’ and it has the ability to bail us out of all our problems. As a result, there is no progress in financial markets right now. Instead we get what our Compliance Czar, Moshe Silver, calls Dodd-Frankenstein “financial reform.”
Barney Frank and Chris Dodd are not men of Ben Franklin’s definition of virtue. They lie. You Tube is one of America’s greatest modern day innovations partly because it has offered us this plain and ugly truth.
Whatever this “government stimulated” growth is that gets reported in this morning’s Q2 GDP number, I can proactively forecast this about it – the GDP number will reveal nothing in terms of the standard of progress that this country should hold itself accountable to.
Never mind the stock market being Wall Street and the manic media’s bogey for progress anymore – for we hard working Americans (I have my green card!) who have actually been creating American jobs for the last 3 years as opposed to bitching about them, here’s what we are looking for as a multi-factor scorecard for American Growth and Progress:
- Strong Employment
- Strong Currency
- Strong Rates of Return
This isn’t political commentary. This is a pragmatic plan. If you’re a professional politician who has been forwarded this email and you don’t like being called names or being called out – too bad. Quit whining, pointing fingers, and fear mongering and fix these 3 things. You actually have a job with wage growth, so start earning your keep.
America has no Growth and Progress right now because we have none, never mind one, of the above:
- Employment – Given yesterday’s weekly jobless claims number of 457,000 we can be assured that the unemployment rate for July will remain above 9%. On a net basis, there have been ZERO net jobs added in this Fiat Republic in the last decade.
- Currency – the US Dollar has been down for 8 consecutive weeks, losing -9% of its value since early June, solidifying the long term TAIL of wealth oriented risk that remains in this country of debauching the currency of our citizenry.
- Rates of Return – sorry middle class Americans with a hard earned savings account. Short term Treasury rates just hit another all-time low this morning and if you want to get yourself levered long another 301k, the SP500 has a negative return for 2010 of -1.3% YTD too.
We get that professional modern day politicians are more focused on their job security than they are showing “continual growth and progress” on these 3 critical scores. As the Benjamin Franklin reminds us, “anyone who trades liberty for security deserves neither liberty nor security” and when it comes to jobs or rates of return in this country today, ain’t that the sad truth.
My immediate term support and resistance levels for the SP500 are now 1076 and 1119, respectively.
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
