“REALITY: Fiscal deficits increase our wealth and collective savings.”
- Stephanie Kelton
Since she went ALL CAPS on that “reality”, I’m thinking Stephanie was talking to us big-timers of the “elite” investing class, eh? If we keep shorting US Dollars and buying Asset Inflation, we’re going to keep getting wealthier.
As for the of rate return on savings with “yield curve control” and anything else big government and central planning fans are going to give #MMT (Modern Monetary Theory) the green light on, I’ll leave that narrative up to them.
Now that we have the Mother of All Doves, Janet Yellen, coming back to the hen house, anything is possible!
Back to the Global Macro Grind…
On the headline news that Yellen is going to be Biden’s Treasury Secretary, you didn’t short more US Dollars and buy more Commodities and Stahks!?! What? Are you crazy?
Why do you think the big Wall Street money backing Biden put her in that seat?
You don’t actually believe that Good Ole Joe came up with the idea of combining the US Treasury with the US Federal Reserve on his own, do you?
Kelton herself says “their red ink is our black ink”!
She wasn’t talking about it the way the market will, again, this morning… but the lower the US Dollar goes, the higher Commodities & Cost of Living goes for low-to-no-income Americans. Sadly, their real-life red ink is our P&L.
Here’s what Mr. & Mrs. Market are thinking about the bounty of Big Government in America pending:
- US Dollar Down another -0.4% against the bloody Euro and breaking towards new Cycle Lows
- CRB Commodities Index closed up at a new Inflation Cycle High of 157 yesterday, +21% since JUN
- Oil (WTI) is inflating another +0.9% this morning to a new 3-month high in Burning Bucks
- Copper is ramping its inflated price to $3.33, a new Cycle High as well
- Gold is down another -1% here after breaking bad to Bearish @Hedgeye TREND
No, not everyone will look at point #5 the way we do. That’s because they don’t understand that:
A) Gold is not a commodity, it’s a currency… and
B) Gold moves up/down, across the Full Investing Cycle, with Real Interest Rate expectations
Since the aforementioned points #1-4 perpetuate short-term economic nirvana (I.e. #Quad2, when both US Growth and Inflation are #accelerating, at the same time), my #process says US Treasury Yields are done going down.
When something is done going down, it starts to go up.
Then it goes up more. On a breakout > 1.01% on the UST 10yr Yield I have Gold going to at least $1759/oz. Yes, I’m still short Gold Miners (GDX) and I shorted more long-term US Treasuries (TLT) on the Yellen headline yesterday too.
Gold Bugs, please don’t cancel.
Empathize with me, peeps. Going both ways in macro markets isn’t easy. You have to be promiscuous and committed to the dating (or data-driven) scene. Don’t get upset about that. Get excited.
This #Quad2 macro market affair between Janet Yellen and the economic data can get REALLY steamy if she is who I think she is (a labor economist) and gives the Fed a short-term fix to the growing US unemployment problem.
Don’t imagine the impossible. Just probability-weigh what all the rich people who gave her new boss the Burning Bucks for the honeymoon. She can CTRL+Print Jobs Growth when combining the Treasury with the Fed.
Remember, pre the Yellen #MMT jobs-for-all news, Hedgeye HAD US GDP ramping to an all-time modern-era Cycle High of +10.3% year-over-year growth during #Quad2 of Q2 2021 anyway!
Then what? What happens to American Made #MMT in Q3 of 2021? Oh no, Mucker – did you have to mention it? The honeymoon and their riches deflate again into #Quad4 in Q3 of 2021…
And then we buy our Gold and Treasuries back?
REALITY: getting the Dollar right helps us get a lot of other things right.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.83-0.97% (neutral)
SPX 3 (bullish)
RUT 1 (bullish)
NASDAQ 11,641-12,003 (bullish)
Energy (XLE) 33.12-38.90 (bullish)
Gold Miners (GDX) 34.06-36.95 (bearish)
Shanghai Comp 3 (bullish)
Nikkei 242 (bullish)
DAX 122 (bearish)
VIX 21.42-27.43 (bearish)
USD 91.96-92.99 (bearish)
EUR/USD 1.177-1.191 (bullish)
Oil (WTI) 40.46-43.61 (bullish)
Gold 1 (bearish)
Copper 3.15-3.33 (bullish)
Bitcoin 17,109-19,291 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
