“Bunker became the richest man in the world at age 40 in 1966 when Oil was discovered in Libya.”
- William Silber
Have you discovered Oil, Gas, and related non-ESG Energy investments in your #Quad2 Asset Allocations? Well done with WTI ramping to new Cycle Highs this morning.
Do you know who Bunker was?
Nelson Bunker Hunt was one of the Hunt Brothers who absolutely hated big government (Gaddafi made him a lot less rich in a hurry) and loved hard assets “such as oil, land, racehorses, and precious metals.” -The Story of Silver, pg xx
Back to the Global Macro Grind…
Welcome to what would normally be Macro Monday. Yes, wakey wakey, it’s Tuesday! And it’s time to measure/map what macro market prices did (last week) within the context of both The Cycle and @Hedgeye TRADEs and TRENDs.
As usual, let’s start with the Global Currency market (which continues to signal Global #Quad2):
- US Dollar Index was flat last week (has only had 2 up weeks in the last 7) and remains Bearish @Hedgeye TREND
- EUR/USD was +0.1% last week and remains Bullish on both our TRADE and TREND durations
- Brazilian Real was +2.7% vs. USD last week to +7.2% in the last 3 months and is also Bullish TRADE and TREND
- GBP/USD was up another +0.3% last week and remains Bullish TRADE and TREND as well
- Chinese Yuan was up a big +1.0% last week to +1.7% in the last 3 months and remains Bullish TRADE and TREND
Despite their economy being the only major one that is NOT in #Quad2 here in Q2 of 2021 (China is in #Quad3), Chinese Stocks #liked their currency strength last week.
The Shanghai Comp rallied back to Bullish @Hedgeye TRADE on a +3.3% week-over-week move but remains Bearish @Hedgeye TREND. Yes, doing macro gets harder when signals diverge on different durations.
Fundamentally, however, it makes complete sense for The People of China to appreciate their purchasing power appreciating. If I were paid in Yuans, I’d appreciate that too.
If you’re paid in Burning Bucks, it was another excellent week to be long of #Quad2 Inflation (Commodities):
A) CRB Commodities Index inflated another +2.4% last week to +23% YTD
B) Oil (WTI) inflated another +4.3% last week to +37% YTD
C) Copper inflated another +4.4% last week to +33% YTD
Vs. Gold +1.4% week-over-week to 0% YTD.
That’s that thing about the year-to-date (YTD) that has to be driving Gold Bugs crazy. Being at 0% YTD during two of the most epic #Quad2’s in US economic history sucks wind compared to many other asset allocations.
#Quad2’s obviously got Energy (XLE) on the long side, but there are plenty of other assets inflating including Food:
A) Coffee prices inflated another +8.2% last week to +11.3% in the last month alone
B) Lean Hog prices inflated another +2.4% last week to +10.6% in the last month as well
I don’t need to be called a bug to ask for coffee and bacon with breakfast in the morning either. I guess you’d call my demand for these basic assets “secular”, lol.
On the US Equity Side last week, the Top 2 Sector Styles were:
A) Industrials (XLI) up another +2.0% to +16.0% in the last 3 months
B) REITS (XLRE) up another +2.1% to +13.7% in the last 3 months
Both of those Asset Allocations have obviously pounded something like Gold this year too. REITS (XLRE) isn’t one of our 4 Horsemen but it looks great in Steep #Quad2 and we hit the buy button on it in Real-Time Alerts when it was on sale in May.
The whole “sell in May and go away” song didn’t work out for those who got out of European Equities either:
A) Swiss Stocks (EWL) were up another +1.8% last week to +8.6% in the last 3 months
B) French Stocks (EWQ) were up another +1.5% last week to +13.7% in the last 3 months
With German Stocks (EWQ) ramping another +1.2% to a fresh new Cycle High this morning, there are precisely ZERO European Equity markets signaling Bearish @Hedgeye TREND during #Quad2 in Q2 too.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.55-1.71% (bullish)
SPX 4107-4244 (bullish)
RUT 2189-2299 (bullish)
NASDAQ 13,213-13,989 (bullish)
Energy (XLE) 50.99-54.71 (bullish)
Shanghai Comp 3 (neutral)
DAX 15188-15664 (bullish)
VIX 15.15-20.48 (bearish)
USD 89.48-90.34 (bearish)
EUR/USD 1.212-1.228 (bullish)
USD/YEN 108.41-109.98 (bullish)
GBP/USD 1.408-1.423 (bullish)
CAD/USD 0.82-0.84 (bullish)
USD/CHF 0.88-0.90 (bearish)
Oil (WTI) 64.44-69.30 (bullish)
Nat Gas 2.93-3.14 (bullish)
Gold 1811-1916 (bearish)
Copper 4.43-4.80 (bullish)
Silver 27.31-28.76 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
