“Rest at the end… not in the middle.”
- Kobe Bryant
That’s how Tim Grover introduces a chapter in Winning that he called “The Chase.” If you don’t know who Grover is, you should. He was Michael Jordan’s personal trainer. After Jordan retired, he told Kobe to hire him.
What I loved about his book is how unapologetic it is in explaining what he calls the “unforgiving race to greatness.”
For me, playing at the highest level of our profession is not enough – winning is. At the top of every risk management morning , I want that. Do you? Are you willing to do what it takes to achieve it? Can you do it every single day? That’s where it starts.
Back to the Global Macro Grind…
Some people prefer to be more politically correct than me. Some like to be nicer than me during game time. To each their own. I don’t play for them – I play for my family, my team, and my subscribers. And I want to win, my way, every day.
Will we win every day? Of course not. But “losses” are only real if we fail to learn from our mistakes.
The worst part about this profession is that everyone seems to be winning all of the time. No matter what the market move or score on the alpha vs. beta boards, there’s some new narrative being pushed where people need to “be right.”
As my friend Mike Taylor (former veteran hedge fund PM at Millennium) likes to say, “don’t be right – make money.”
I’ll be having a Real Conversation with Mike today LIVE @HedgeyeTV at 1PM. He wasn’t the first one to use that one-liner… and he won’t be the last. The reason why I have pro-to-pro Real Conversations is because they aren’t CNBC – they’re real.
So, did you get yesterday’s all-time closing highs in SPY, QQQ, etc. right? Did you make money on that?
For those of you who run either OPM (other people’s money) and/or your own, you know that those are often two different questions. You may have been expecting higher-all-time-highs, but you may or may not have made money yesterday…
It wasn’t just the NASDAQ and Tech (XLK) making new all-time highs, our Long REITS (XLRE) and Germany positions did too.
And, despite the score, some of my clients are forwarding me emails from Morgan Stanley titled “Rolling Corrections” during some kind of “mid-cycle” narrative. Huh?
These have been rolling waves of ALL-TIME HIGHS in core #Quad2 and pending #Quad3 Asset Allocations!
As far as getting the “early”, “mid”, or “late” Cycle “calls” right, I have no idea how my competition throws a mid-cycle blanket on top of it all, but I like it. Oh yeah, I really like it… because I want to compete with that.
To review some big Macro Cycle views we continue to maintain:
- US GDP, INFLATION, and EARNINGS are heading into PEAK Cycle
- US Employment and Inventory Cycles are still EARLY Cycle
- Europe (Germany in particular) is cresting into PEAK Cycle
- China’s Cycle Peaked in FEB-MAR and has been #slowing into #Quad3 Stagflation since
Yes, there have been some episodic-and-non-TRENDING corrections in just about everything since Global #Quad2 became obvious in NOV of 2020. But if you bought every damn dip, you’d be wining The Game instead of whining about its score.
My sincere congratulations to everyone who actually has the wins in their accounts. If you don’t, get better.
The #1 way to get better at this is to learn from your mistakes faster than everyone else. An all-encompassing way to do that is to get rid of your mistakes (read: take losses), ride your winners, and hunt for new wins.
Personally, I’m looking forward to this Phase Transition out of Global #Quad2 (ex-China) into different Quads. I think my most likely wins will be staying with what works in BOTH Quads 2 & 3.
A simple Long/Short US Equity Sector Style example of that would be:
A) Long Energy (XLE) in both Quads… and
B) Short Consumer Staples (XLP) in both Quads
The beauty of this long/short pair is that for longer-term, #FullCycle Investors, you don’t have to pay the taxes associated with these epic Long Energy wins we’re still riding (XLE is +39.2% YTD, don’t forget).
The other is that it’s an easy one for me to explain to both individual and institutional subscribers. If we’re right on Sticky Stagflation pending post the aforementioned US Cycle Peaks (I.e. Phase Transitioning, economically, into #Quad3)…
Then, as I wrote in my Top 3 Things today (published at 5:38AM to subscribers), many of these Consumer Staples (XLP) companies eat inflating input costs AND have no pricing power to offset them.
Immediate-term @Hedgeye Risk Range™ with TREND signal in brackets:
UST 10yr Yield 1.28-1.54% (bullish)
UST 2yr Yield 0.19-0.28% (bullish)
SPX 4 (bullish)
NASDAQ 14,441-14,794 (bullish)
Tech (XLK) 146.61-152.78 (bullish)
Energy (XLE) 51.21-55.47 (bullish)
REITS (XLRE) 44.64-46.81 (bullish)
Shanghai Comp 3 (bearish)
DAX 15,403-15,838 (bullish)
VIX 14.09-18.42 (bearish)
USD 91.29-92.80 (bearish)
Oil (WTI) 71.92-75.96 (bullish)
Nat Gas 3.47-3.77 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
