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Editor's Note: The Early Look note below was written by Hedgeye CEO Keith McCullough on June 19, 2020. Keith explains going long commodities on the back of an accelerating outlook for inflation. |
“Most people make changes in behavior due to emotion, not facts and figures.”
- Robb Wolf
Don’t worry (and “don’t fight the Fed”, eh). Robb Wolf wasn’t talking about you. He was talking about the other people!
As Wolf explains in Wired To Eat, “people are generally not swayed into action by information… a few people are driven by information, and those people tend to be geeks, like yours truly.” (pg 84)
He was, of course, alluding to the discipline of your diet. But, if I lop in all of the newbs trading in their Hoodie accounts, the same could be said for a massive population of “investors.” They aren’t swayed by the data embedded in The Cycle. They chase narratives.
Back to the Global Macro Grind…
“So”… let me tell you a story…
There once was a government that was not only trying to protect the assets of the rich, but also trying to win an election. They not only printed money, to infinity and beyond, but they spent it fiscally, in TRILLION US Dollar increments at a time…
The government literally wrote checks (big checks) to The People, telling them it will all be ok, on the “other side” of a bridge, that includes its re-election. All the while, they had a lawyer from a place called Private Equity, running the printing press…
Then, all of a sudden, seemingly out of nowhere – as if “no one” could see it coming – the prices of things in those debauched and devalued Dollars, went up – then they went higher and higher … and The People had to pay for those things, in their Dollars…
#InflationAccelerating = Buy Commodities
Got people pitching you on some great stahks? How about something longer-term that A) hasn’t gone bankrupt and/or B) have to beg for a Fed Bailout in order to be an ongoing concern? You know, like a “Secular Grower”, or something like that – like food!
While it’s probably not as “cool” as something like Facebook (FB) used to be, as our Real-Time Alerts subscribers know, I’ve recently been buying some secular consumption longs of my own: Cattle, Hogs, Corn, and Soybeans.
Is there a case for the Paleo Diet? What about an Anti-Keto diet? Did you know that on a @Hedgeye investable TREND basis (i.e. you actually own it for 3 months or more), that Orange Juice and Rough Rice beat pretty much every major index of Stahks! in the world?
I covered my only US Equity Index Short in RTA (Financials, XLF) for another gain yesterday, so I’m feeling pretty sweet this morning. You know, as in I didn’t get squeezed for the last 2 weeks, ha!
With the PPT and America’s central-market-planning committee hard at work into options expiration today, here are my Top 3 (Macro) Things (Institutional Research note that goes out at 6AM EDT) to think about this morning:
- USD – in other gravitational news, both on the Fed and Fiscal side, the US Government remains committed to compromising the credibility of America’s currency – Down Dollar during a depression/recession = Recessionary Stagflation in Q3 #InflationAccelerating
- COMMODITIES – looks to me like the long-term Bear Market in Commodities, as an Asset Class, is over. Oil leading the reflation ramp this AM with WTI up another +3.4%, Copper +1.4% seeing follow-through to my recent Bullish @Hedgeye TREND signal, and my Long Corn and Soy (SOYB) positions are seeing another bid on the greatest #BeanDeal in the history of deals (sort of)
- VIX – the coordinated central-market-planning committee just can’t shake my Bullish @Hedgeye TREND signal in US Equity Vol with the VIX going out at 32.94 last night ahead of today’s big options expiration – could/should get more volatile from here ahead of the worst Earnings Season of the modern era with a VIX Risk Range of 29.74-41.55
As the real-life cost of living in this country re-accelerates to the upside on The Other People (who have low incomes or no job), I fully expect NO one in either the aforementioned US Government or the formerly hallowed halls of Old Wall Street banks to explain this.
But, I have a sneaking suspicion that the story I told you this morning doesn’t quite end as well for all of those Other People that we, as a profession, aren’t so concerned about. I’ll say ‘we’ because, sadly, I’ll personally take the responsibility for our Institutionalized neglect.
If no one else is going to explain how we make money while The Other People eat the cost of it all, every morning I’ll stand here on the front line of American Liberty & Free Speech doing my best to try to be the change the world needs to see from Wall Street.
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
Click here to read today's Chart of the Day: Trivial → Of Course Inflation Is Going To Accelerate
