US Dollar: Ugliest Macro Chart In The World

POSITION: SHORT US DOLLAR (UUP)

 

No, I’m not telling you to short the US Dollar right here and now. It will finally be immediate term oversold within 50 basis points from today’s price.  That said, you should continue to short it with impunity on rallies to lower-highs until America changes its conflicted and compromised monetary policy.

 

I typically don’t short-and-hold. But in this case I am, at a bare minimum, evolving my investment style. I shorted the US Dollar on June 7th when consensus about “Euro Parity” was running rampant and the US deficit and debt ratios were about to cross the proverbial Rubicon of risk. Risk for anyone with a US Savings account (which yields ZERO percent) or anyone who cares about the US Dollar-adjusted-value of their wealth, that is…

 

CNBC executives won’t get this because they think that the America’s health should be solely measured by the daily tick of her stock market. Sadly, they cheer on things like “QE” and they buy-and-hope that a balding man in government will save their advertising revenues.

 

Debauching a citizenry’s currency for the sake of short term stock market returns never ends well for that currency’s society. The current inverse correlation between the US Dollar Index and the SP500 is -0.88. That’s alarmingly high, but at least the nature of the mathematical reading has a very high correlation with the complacency of the government that stands behind this currency’s value destruction.

 

The reflation trade in everything priced in US Dollars will be on until the music stops. And it will stop. We’ve all seen this movie before. This time is different only in that we won’t be able to blame Lehman or Madoff.

 

"To stand in silence when they should be protesting makes cowards out of men."
- Abraham Lincoln

 

Keith R. McCullough
Chief Executive Officer

 

US Dollar: Ugliest Macro Chart In The World - 1


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