Hedgeye Risk Management’s CEO Keith McCullough is picking a fight with the Federal Reserve in his morning newsletter titled “Bernanke’s War.”
I’ve fought the Fed before, and won. If no one else wants to strap it on and do this, I’ll officially wear the C and stand on the front lines of this war. If the last 3 weeks of Down Dollar is the best you have Bernanke, game on.
“Don’t fight the Fed.” Yep. Got it. That and Madoff’s returns are about as believable as the Hunger Games. On our Q2 Macro Themes call in early April we’ll show you a full slide deck of what fighting the Fed at intermediate-term market turns has saved you:
Then again, back in December of 2010, McCullough blogged the exact same thing:
Conventional wisdom says don’t “fight the Fed.”
We live in unconventional times.
Not only do I think it’s a great time to pick a fight with the Chairman of the Federal Reserve, I think we can win.
Let’s go in reverse order and start with the US Dollar first. Last week the US Dollar was up another +0.86% for the week. It closed higher for the 5th week out of the last 6 and +5.3% higher than its YTD low established on November the 4th (post QG2 and the midterm elections).
We’ve been long the US Dollar (UUP) since November the 4th in anticipation of both global inflation accelerating and globally interconnected risk compounding. We’ve also had a keen eye on the macro calendar catalyst pending in the new year of both Ron Paul being able to subpoena the Fed and Republicans having a mandate for American Austerity measures.
That was December 14 he wrote that. Well, here’s a chart of the dollar index starting on December 14, 2010. It proceeded to tank all the way through September 2011.
We don’t know, it’s possible that he sold quickly after that, or that he will say that since he bought the dollar in November 2010 that he was right that it jumped after that.
The bottom line though: The last time he made a similar pronouncement, with dollar bullish tendencies, the dollar fell.
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