“Always bear in mind that your own resolution to succeed is more important than any one thing.”
-Abraham Lincoln

As Tiger Woods walked down the 18th fairway at the Bridgestone Invitational, Americans saw a man with undeniable leverage to his own resolution to succeed – that’s the kind of leverage you want to be long in this market.

“Everything comes to him who hustles while he waits.”
-Thomas Edison

While it makes perfect sense for market operators to take some time off in the summer, Mr. Macro Market waits for no one. Yesterday, I wrote that I was going to wait and watch for the US Dollar’s reaction to this US unemployment report – that doesn’t mean I stop hustling.

If you’re gonna set somebody up, it’s gotta be a surprise, you got that?

- Chili Palmer, “Get Shorty”

An appeaser is one who feeds a crocodile, hoping it will eat him last.

- Winston Churchill

“Offer them what they secretly want and they of course immediately become panic-stricken."
-Jack Kerouac

It’s no secret – monkeys want bananas. Get one of those qualitative “channel checking” Wall Street “consultants” to test that primitive theory. Green or yellow, when the monkeys are heated up in a panic, they’ll clamor for them.

One of the main lessons from what is becoming as forceful an up move as we had on the way down is that Wall Street continues manages risk on a revisionist basis. This is not a proactive investment process. It’s reactive, and you should capitalize on its outputs.

Prior to Q2 of 2008, for most 30-year old hedge fund managers a VIX above 30 was unheard of. Although I’m using that age to be cute, the reality is that there are very few institutional managers who managed their portfolios in a 30-80 VIX environment prior to 2008. Today, there are equally as many PMs who are being told to manage their exposures towards a 30-80 environment AFTER the fact.

“Charlie and I believe that when you find information that contradicts your existing beliefs, you’ve got a special obligation to look at it – and quickly”
-Warren Buffett

Other than consensus starting to finally become bullish enough, I really don’t see anything in global macro today that should stop the upward momentum of anything priced in US Dollars. We have new highs, a new month, and a New Reality.

“There is nothing more deceptive than an obvious fact.”
-Sherlock Holmes

The global macro fact of the matter remains – when the US Dollar goes up, everything priced in those dollars goes down. That’s what happened yesterday. Let’s eliminate that from our minds and focus on today.

According to data released by the U.S. Department of Housing and Urban Development, sales of newly constructed single-family homes spiked 11% in June to an annualized rate of 384,000 homes. Consensus had forecast seasonally adjusted sales of 352,000.

While the rate of improvement is consistent with our 2Q09 housing bottom call, the rate of sales is still 21% below the year ago levels. For reference, four years ago (during the height of the housing boom), the sales rate for June was 1,374,000, nearly three-and-a-half times higher than last month.

The ETF marches on. Traders Magazine Online (14 July) reports that the volume in ETFs is exploding. According to the article, from last September through May, “ETF consolidated volume averaged almost 49 billion shares a month. That is compared to almost 20.5 billion a month on average from the same period one year earlier.” This 150% jump follows a report where the NYSE found ETF consolidated volume on average doubled in comparable nine-month periods.

In other words, not only is ETF volume growing tremendously, it is growing at an accelerating pace. We hold no degrees in rocket science – nor in any science – but we wrote earlier that the entry of such behemoths as PIMCO in to the ETF space all but guarantee that this market will soon top one trillion in assets. Now, according to the Traders Magazine article, it appears that even the sky may not be the limit.

"I just made mistakes… And obviously you can't make mistakes and expect to not only make the cut but also try and win a championship.” –Tiger Woods

After shooting a second 2nd 74 and Tiger missing the cut at this weekend’s British Open, one of the more prescient thinkers in our subscriber base pointed out that quote to me. His point was that this is how the leaders of the US Financial system should behave. Holding themselves accountable. Looking in the mirror, calling it like it is.

“Don't let the fear of striking out hold you back.”
-Babe Ruth

After yesterday’s move in the market, it’s only fitting that today’s Early Look is U.S. focused. We are swinging away everyday at Research Edge without fear.

“Tactics without strategy is the noise before defeat.”

-Sun Tzu

Managing risk around this proactively predictable trading range remains our objective here in Q3. All of the noise you hear about “200-day moving averages” to crashes and “Chinese bubbles” are just that – noise. Capitalize on it.

"What lies behind us, and what lies before us are small matters compared to what lies within us."
- Ralph Waldo Emerson

I was on a flight to Los Angeles last night and I could not stop thinking about the manic groupthink that has become the US stock market. Being on a Virgin America flight where I was hostage to getting the market’s post close news from CNBC didn’t help. I wonder if Larry Kudlow knows about You Tube’s archiving process.

You see in this world there's two kinds of people, my friend. Those with loaded guns, and those who dig. You dig. (The Good, the Bad, and the Ugly)

Some folks believe it should not be a fundamental requirement for financial survival that every private investor be an expert in forensic accounting. Thus, it is with more than our usual dash of skepticism that we look at the number – $1,593 – representing Citigroup’s (C) net profit for the first quarter. This comes on the back of a year where the company lost $27.6 billion. One need not be the proverbial rocket scientist to know that this “earnings” number should have an asterisk.

"Victory is reserved for those who are willing to pay its price."
- Sun Tzu

This morning we are waking up to Timmy Geithner headlines. He said "it's going to be awhile before we're confident we're going to have a strong sustainable recovery in place" and that “enormous challenges” remain for the US economy. I don’t disagree with any of that.

In its ongoing quest to make capitalism safe for human consumption, the Obama Administration has resurrected on the an economic policy concept discredited under President Nixon, whose 90-day wage and price freeze of 1971 morphed into a series of government programs lasting into 1974. Programs being put forward by Team Obama offer price controls in sheep's clothing.

Conservative Republicans – whose concept of Free Markets includes drafting legislation to crush free competition – may have met their match in a liberal Democrat, who appears to favor every aspect of the free market, as long as the market itself is kept under lock and key. The operative factor underlying the recent White Paper’s regulatory initiatives is the notion that Someone is doing something they shouldn’t, and it is the job of government to put a stop to it. Having a traffic cop on duty reduces traffic accidents and pedestrian fatalities.

The New York Times (3 July, “SEC May Reinstate Rules For Short-Selling Stocks”) reports that the Commission looks set to bring back the Uptick Rule, abolished by the Commission under Chairman Cox in 2007.

The Rule, voted out based on studies that seemed to show it had no effect on market stability, is on the political agenda. According to the Times, House Financial Services Committee Chair Barney Frank is pushing SEC Chair Schapiro on the issue, as is Delaware Senator Edward Kaufman, who has introduced a bill to reinstate the Rule.

Poor Sheila Bair. She is getting kudos from the public – including a smart piece praising her in the current New Yorker magazine (28 June, “The Contrarian: Sheila Bair and the White House Financial Debate”). Bair was just honored with the Profile in Courage Award from Boston’s Kennedy Library Foundation – awarded annually to public officials that the Foundation deems to have “exhibited political bravery.”

Bair, the article reports,

It is the end that crown us, not the fight. (Robert Herrick)

Bernie Madoff must be upset. Here he went to the trouble to make sure everyone knows he perpetrated the greatest financial fraud in history, and he doesn’t even come close to the all-time record sentence.