“So long as the ocean had no end, life had no starting point.”
- Timothy Egan
And you thought trying to front-run me being long of #Quad4 was bad… try being sent from Ireland to a penal colony called Australia just for having an opinion that differed from the British version of ye Olde Wall!
“For 112 days , Thomas Meagher’s world was a brig barely thirty yards in length, stern to stern, floating from the Northern Hemisphere to the Southern, past two continents to get to a third – the world’s largest prison.” -The Immortal Irishman, pg 85
They called it “The Island of The Damned”… and that’s where #HedgeyeNation should have sent me packing if I missed riding out the Full Cycle Investing returns that have been associated with #Quad2 in Q2.
Back to the Global Macro Grind…
I like to tell my loathers that I’m really not cocky at all. I’m just Canadian Irish. No, our whiskey isn’t as good as the stuff I found at Buffalo Trace in Kentucky earlier this week. And no, I’m not as proper as most American Linear Econs either…
But oh can I trigger some Gold Bugs!
After failing @Hedgeye TREND resistance of $1919/oz, Gold is down again this morning, taking its Full Investing Cycle Drawdown to -10.1% from its #Quad3 Cycle Peak in AUG of 2020.
If you have friends who are Permas (permanently long of certain assets no matter what Quad we’re in), tell them no worries, eh. I’ll be long their Bitcoins and Gold Bullion again when the @Hedgeye TREND signal supports my hard earned Asset Allocation.
With Bond Yields bouncing off the low-end of my Risk Range this week, Gold has corrected from the top-end of its range. In fractal math, we call that a Similar Set (I.e. when certain things happen that are causal in nature).
Economically speaking, ex-gravity, what caused the UST 10yr Yield to stop going down at 1.55%?
A) Was it the US Durable Goods & Capex report yesterday?
B) Was it another ROC #slowing US Jobless Claims report?
C) Was it a fresh new Cycle High for US Earnings growth?
Alex, my Canadian friend from Sudbury, Ontario, I’ll take A, B, and C for many Burning Bucks.
May my Irish Catholic God bless the soul of Alex Trebek. He was one of the few immigrants to this great country that had a longstanding run in media/content business who was both apolitical and data driven with a historical time-series!
Back to these epic non-mid-cycle economic ROC reports:
A) US Durable Goods #accelerated to +52.1% year-over-year growth in APR vs. +36.3% in MAR
B) US Capex #accelerated to +25.3% year-over-year growth in APR vs. +14.4% in MAR
C) SP500 Earnings (488 companies have reported) #accelerated to a new Cycle High of +50.2% y/y growth
In other words, with the SP500 having ramped back to being only -0.7% from her all-time closing high of 4232 (and our 4 Horsies, leading that ramp), Mr. and Mrs. Market have absolutely nailed #Quad2 since we made that call back in November.
Oh, nice call bud. You’re pretty sweet. But now what? Off to the penal colony for Mucker? (that’s with an M, eh)
Nope, not just yet (i.e. not if every major macro market signal embedded in The Singularity of my Signaling #process has anything to do with the forward outlook). This morning’s move in Oil is, as my Jamaican friends like to say, beeeg time, Mon:
A) Oil (WTI) is inflating to a new Cycle High this morning of $67.31/barrel
B) Oil has immediate-term upside in the @Hedgeye Risk Range towards $68.49/barrel
C) Oil has intermediate-term @Hedgeye TREND upside towards $74.11/barrel
With Gold’s immediate-term downside towards $1807/oz, why on my Fractal God’s good earth would I make a major Asset Allocation pivot OUT of where I’ve been (long Commodities, Oil, Energy Stocks, etc.) into someone else’s Perma religion?
I’ll stick with the Full Investing Cycle #process where getting A) the Dollar right means B) you get Commodity Inflation right … get that Similar Set right and you’ll get both the forward inflation outlook and bond yields (and Gold) right…
In the meantime, stay away from floating on a brig for 112 days, reading about the end of the world. And, as the Irish like to say, may the ripping #Quad2 road rise up to meet you.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.55-1.72% (bullish)
SPX 4110-4235 (bullish)
RUT 2193-2303 (bullish)
NASDAQ 13,195-13,894 (bullish)
Energy (XLE) 50.79-54.75 (bullish)
Financials (XLF) 36.99-38.66 (bullish)
Utilities (XLU) 64.20-66.34 (bearish)
DAX 15173-15591 (bullish)
VIX 15.07-20.38 (bearish)
USD 89.47-90.35 (bearish)
EUR/USD 1.211-1.228 (bullish)
Oil (WTI) 63.41-68.49 (bullish)
Nat Gas 2.92-3.13 (bullish)
Gold 1 (bearish)
Copper 4.43-4.81 (bullish)
Silver 27.23-28.56 (bullish)
Bitcoin 32,791-45,144 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
