“Bannister understood that every long run is a series of short runs.”
Key Takeaways
Key takeaways
- Would you rather get paid in a currency (US Dollars) that is devalued by -3.9% in the last 3 months or one that’s appreciated your purchasing power by +9.4% in the last 3 months?
- We are Long India (INDA and SMIN) instead of both China and widely held US #BubbleCap Tech (XLK) since these GROWTH #slowing Quads hit both countries here in Q3 (XLK is DOWN -2.9% in the last 3 months).
- Gold was up another +3.3% last week, taking its 3-month Full Investing Cycle Return to +12.0%
The big picture
As most of you know, Roger Bannister was the British middle-distance runner best known by #history as the 1st person to run a mile under 4 minutes. Michael Cannivet used the Bannister training #process to introduce his new book 04:00 The Four Minute Retirement Plan.
In what Cannivet calls his “Mental Model #3: Straightforward Plan”, he explains that Bannister “simplified his approach to the four-minute mile using a tactic called chunking.” Not unlike Hedgeye’s Full Investing Cycle #process, “chunking is deconstructing a big goal into smaller goals that are easier to execute. This helps build momentum.” (pg 7)
Since, by definition, a #GoAnywhere (any Asset Class, anywhere in the world) Strategy is a “big goal”, the only way to do that is to be able to break down EVERY Country, Commodity, etc. on their SIGNAL to QUAD scores. That way we can look at every incremental decision to ADD/SUBTRACT Asset Allocations in mathematically defined chunks.
Macro grind
Welcome to another Macro Monday @Hedgeye where all of the measuring and mapping of SIGNALS and QUADS has been done. We’re proactively prepared to preserve and protect our hard-earned capital from Friday’s new all-time highs.
Let’s start with one of the many Asset Allocations (Global Currencies) that should continue to work for us whether the USA is in #Quad4 or #Quad3:
- US Dollar Index is now down -3.9% in the last 3-months in anticipation of the Fed devaluing it via Rate Cuts
- EUR/USD remains Bullish TRADE and TREND after the ECB signaled they expect INFLATION to go back up!
- Japanese Yen was up another +1.2% vs. USD to new Cycle Highs as the BOJ tightens (while the Fed Cuts)
- GBP/USD was -0.2% but also remains Bullish TRADE and TREND with NO CUT expected by the BOE this week
- Mexico’s Peso had a big Counter TREND bounce of +3.7% vs. USD last week but remains Bearish TREND
- Malaysia’s Ringgit was up another +0.7% vs. USD last week, taking its 3-month TREND to +9.4%
Why do we care about Malaysia’s Ringgit? A: because our community is long of Malaysia (EWM).
Since the Fed and all their money printing fans won’t do The Purchasing Power Of The People math for you while they’re begging for the only thing they know (Rate Cuts and Cowbell), we will.
Would you rather get paid in a currency (US Dollars) that is devalued by -3.9% in the last 3 months or one that’s appreciated your purchasing power by +9.4% in the last 3 months?
Serious economists like Judy Shelton get the math. So do The People.
While Dr. Copper failing @Hedgeye TREND resistance of $4.30/lb this morning (Copper down -0.4% vs. Gold +0.3%) doesn’t confirm a #QuadShift (yet) in the USA from #Quad4 to #Quad3, Commodities did bounce off #Quad4 Cycle Lows:
A) Oil (WTI) bounced +1.5% last week, taking its 3-month #Quad4 disinflation to -11.2%
B) Copper bounced +4.0% last week, taking its 3-month #Quad4 disinflation to -5.5%
C) Corn bounced +1.7% last week, taking its 3-month #Quad4 disinflation to -9.9%
So some people can run around with their hair on fire about this pending #QuadShift, but the real fire has been in portfolios that weren’t positioned for both #Quad4 in Q3 in the USA and #Quad3 (Stagflation) in China in Q3:
A) Chinese Stocks (Shanghai Comp) dropped another -2.2% last week taking them to -10.7% in the last 3-months
B) India’s Stock Market (BSE Sensex) was up another +1.9% last week to +8.1% in the last 3 months
So, if you could, you would be Long India (INDA and SMIN) instead of both China and widely held US #BubbleCap Tech (XLK) since these GROWTH #slowing Quads hit both countries here in Q3 (XLK is DOWN -2.9% in the last 3 months).
You’d also have been Long of Gold vs. Short or Underweight Energy (XLE) in #Quad4:
A) Gold was up another +3.3% last week, taking its 3-month Full Investing Cycle Return to +12.0%
B) Energy (XLE) was down another -0.5% last week, taking its 3-month #Quad4 disinflation to -3.5%
Oh, you have Old Wall baller friends who don’t like it when I cherry pick these Asset Allocations and Sector Styles that they don’t own yet? Next time you see them on the fairway, fire this alpha ball over to them with a Hedgeye logo on it:
A) REITS (XLRE) were up another +3.9% for us last week, taking their 3-month Full Investing Cycle Return to +17.4%
B) Utilities (XLU) were up another +3.5% for us last week, taking their 3-month Full Investing Cycle Return to +12.0%
Gold and Utes both up a perfect +12.0% in the last 3 months = Fractal Beauty.
And just think (and smile) about it… you didn’t have to beg for cowbell and/or hope a dude in a black leather jacket named Jensen was going to “sound” or make you “feel” bullish to make all of this money in #Quad4…
You just had to understand that every long run of compounding your Full Investing Cycle returns is a series of Quad Runs.
Our levels
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 3.60-3.81% (bearish)
Investment Grade (LQD) 111-114 (bullish)
SPX 5400-5655 (bullish)
NASDAQ 16,570-17,799 (bullish)
RUT 2070-2193 (bullish)
Shanghai Comp 2690-2816 (bearish)
BSE Sensex (India) 81,501-83,409 (bullish)
VIX 15.14-23.17 (bullish)
USD 100.36-101.74 (bearish)
Oil (WTI) 65.19-71.19 (bearish)
Nat Gas 2.11-2.41 (bullish)
Gold 2525-2619 (bullish)
Copper 4.00-4.25 (bearish)
Silver (SLV) 28.25-31.65 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
