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Editor's Note: This is a complimentary Early Look note written by Hedgeye CEO Keith McCullough on June 3, 2021. Learn more about our Early Look morning note here.

“My daughter and son had a children’s toy called a super ball… and I probably interchanged the phonetics.”
- Lamar Hunt

  • Being long Super Squeezer Factor Exposures vs. LOW BETA, LOW SHORT INTEREST has pretty much made the year for a long list of Macro Aware hedge funds. This could/should be their Super Bowl year, indeed.
  • For those of you who hedge and/or risk manage your wealth, Short Duration & Deflation has been a wonderful way to express your #Quad2 (growth and inflation #accelerating, at the same time) Asset Allocations since NOV 2020.

That’s how Lamar Hunt invented the name Super Bowl“The 34yr old owner of the Kansas City Chiefs negotiated the merger of the upstart American Football League with the older and established NFL in 1966.”

“Lamar was proud of his franchise, especially after his Chiefs won the Super Bowl in January 1970, but he had no way of knowing that 10 years later the trophy itself would be worth 25x its original value…”

“In January of 1980, the price of Silver had jumped to $50 an ounce, a modern record that still stands, and Lamar, together with his older brothers, would be accused of rigging the price of the white metal…” -The Story of Silver

EXCLUSIVE | Early Look: Super Squeezers = #Quad2 - 06.02.2021 MATRIX shorts cartoon

Back to the Global Macro Grind…

While neither the price of Gold nor Silver is “jumping” to new all-time and/or Cycle Highs (like plenty of your #Quad2 Asset Allocations are this morning), oh do both metals have a long history of name calling and storytelling!

Personally, I make up names for things pretty much all of the time. That’s what makes both the Hedgeye #Process and our language unique – they’re ours – and with the awesome audience that is #HedgeyeNation, we keep building upon both.

Instead of being called a Gold Bug or Silverite, this is what I’ll keep calling Gold and Silver this morning:

A) Gold is a Bearish @Hedgeye TREND with a Risk Range = $1815-1915
B) Silver is a Bullish @Hedgeye TREND  with a Risk Range = $27.42-28.44

Are they different? A: Yes. Both in @Hedgeye TREND Signal and Cycle Time terms, Gold is not Silver.

Unlike our core Long Oil/Energy (XLE) positions, which are making new Cycle Highs this morning with XLE +46% YTD, Gold is -0.75%, taking its #FullInvesting Cycle Drawdown back down to -9.8% from its #Quad3 Cycle Peak in AUG of 2020.

Since I made up The Quads (and Full Cycle Investing) that last sentence confounds some Perma Gold Bugs & Bulls…

If you have Old Wall friends who A) don’t know what The Quads are and/or B) didn’t know that Gold loves #Quad3 Stagflation, peaking (in Cycle Time) there in 1980, 2011, and most recently in 2020… now they know.

For those of you who hedge and/or risk manage your wealth, Short Duration & Deflation has been a wonderful way to express your #Quad2 (growth and inflation #accelerating, at the same time) Asset Allocations since NOV 2020.

That’s not just cherry picking on Gold or our Short TLT positions – it’s also being long of the Super Squeezers:

A) HIGH SHORT INTEREST stocks remain Bullish @Hedgeye TREND
B) HIGH BETA stocks remain Bullish @Hedgeye TREND

“But, but… my buddy Bunker from my B-School told me government is bad and both GME and AMC are overvalued.”

Yep, that sounds really smart… but you could have lost your hedge fund here during #Quad2 if you didn’t know that, in addition to being underweight or short TLT and Gold, you should be Long HIGH BETA  and HIGH SHORT Interest stocks:

A) HIGH SHORT INTEREST stocks have a #FullCycle and TRENDING return of +24.2% in the last 6 months
B) HIGH BETA stocks have a league leading #FullCycle and TRENDING return of +34.1% in the last 6 months

Yep, the only thing better than inventing The Quads is back-testing economic and market history against them. Instead of calling me every name under the sun this year, I suggest some of these surly hedgies learn something from their losses.

Not unlike being Long something like Copper (CPER) and Corn (CORN) vs. short Gold (GLD)… or being Net Long High Yield (HYG) and a Rates Steepener (IVOL) vs. short the Long Bond (TLT)…

Being long Super Squeezer Factor Exposures vs. LOW BETA, LOW SHORT INTEREST has pretty much made the year for a long list of Macro Aware hedge funds. This could/should be their Super Bowl year, indeed.

Our Levels

Immediate-term @Hedgeye Risk Range with TREND signal in brackets:

UST 10yr Yield 1.55-1.70% (bullish)
SPX 4152-4236 (bullish)
RUT 2237-2320 (bullish)
NASDAQ 13,406-13,965 (bullish)
Energy (XLE) 52.10-55.97 (bullish)
VIX 15.06-20.26 (bearish)
USD 89.53-90.23 (bearish)
Oil (WTI) 65.04-69.87 (bullish)
Gold 1815-1915 (bearish)
Copper 4.45-4.76 (bullish)
Silver 27.42-28.44 (bullish)

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer

EXCLUSIVE | Early Look: Super Squeezers = #Quad2 - 6 3 2021 7 04 57 AM