“Winning has its own language, and it doesn’t speak bs.”
- Tim Grover
In his Winning (at the highest level of your profession) book, Tim Grover has an excellent chapter that he titled The Language of Winning. “If you frequently announce on social media that you crushed it and killed it… this is going to hurt…
Everyone is not a “legend” or a “beast”, every event is not “epic” and “life-changing”… and everyone driving a Ferrari is not “on fire”… Winning requires real-talk. There is no talk about motivation. Motivation is entry level…” (pg 11)
You don’t get to play The Game at the highest level unless you are highly motivated. Once you get there, all the talent in the world won’t help you if you aren’t resilient when you face real-world adversity either. Grover didn’t write that. I did.
Back to the Global Macro Grind…
If there’s one word that defines this uniquely American bull market in both the SP500 and the NASDAQ, it is #resilience. While the former #Quad2 bull that was the Russell 2000 continues to break down, SPY and QQQ continue higher.
What’s making QQQ so resilient? What made one of our Top 3 USA Sector Styles (REITS) punch their ticket to new ALL-TIME closing highs yesterday? No, I didn’t say XLRE crushed it. I just went all CAPS on you with that one instead.
The personal truth about being a player who also has to write about The Game every day is that it really sucks for me sometimes. When I’d play hockey, someone else would just write about my performance (good or bad), and that was it.
There were no words coming from me other than the ones I’d chirp at the other players on the ice.
But today is a new day. And this is the ranting path that I chose to show the world that we can all play The Game out loud for all to see and be transparent and accountable about EVERY move we make. This isn’t epic. This is #education.
Back to what’s driving SPY, REITS, etc. to all-time highs – it’s largely the #Quad2 and #Quad3 data:
A) EARNINGS: 178 of the SP500’s companies have reported an aggregate #acceleration in y/y EPS of +107%
B) CONFIDENCE: Consumer Confidence #accelerated to a new Cycle High of 129.1 in JUL vs. 127.3 in JUN
C) HOME PRICE INFLATION (HPI): just #accelerated to an epic new Cycle & All-Time High of +18.0% y/y growth!
Yes, Grover, I used the word epic. Look at the Chart of The Day, bro. “Epic” is a word, so A) I can use it when I want to and, more importantly, B) it is understating that key component of inflation.
Put those ABC’s together and what do you have?
You have American Capitalists making more money (Earnings) than they EVER have with their Cycle High Confidence being driven by some of their largest assets (their homes and equity portfolios) ripping to all-time highs.
But, but, the US Capex report showed a sequential #deceleration in JUN to +18.3% year-over-year (y/y) growth vs. 23.5% in May. Yep, and you did what with that in June when you could have bought Nat Gas (UNG), REITS, and Tech (XLK)?
It’s almost August btw. And that HPI print of +18.0% is one of the most important leading indicators for our already Street High Nowcast for US headline (CPI) Inflation for both Q3 and Q4 of 2021.
If you have friends who whine more than they win. Or if you know players in The Game who are always bearish and missing this USA #Quad3 bull market move, send them to Asia – that’s where they’d actually have made some money:
A) China (FXI) and Hong Kong (EWH) Shorts just delivered serious alpha… and
B) Japanese Equity Shorts just got you the win again last night with the Nikkei -1.4% to -5.1% in the last month
Japan’s got the Olympics, but they are not winning. They are right back to where they usually go after a cyclical economic #acceleration and bumping up against tougher base effects: #Quad4.
Once their lowly (TV) rated time on the clock ends, Japan’s economy will likely continue to lose vs. a resilient America. Or, as Grover says about those who aren’t killing it, “it’s like that temporary rush you get from eating too much frosting…
Right before it wears off, you’re suddenly face-planted on the cold hard floor wondering what the hell happened.”
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.19-1.44% (bearish)
UST 2yr Yield 0.18-0.26% (bullish)
SPX 4 (bullish)
RUT 2136-2252 (bearish)
NASDAQ 14,470-14,959 (bullish)
REITS (XLRE) 45.61-46.97 (bullish)
Shanghai Comp 3 (bearish)
Nikkei 27,003-28,267 (bearish)
VIX 15.04-21.96 (bearish)
USD 91.65-93.10 (bearish)
Oil (WTI) 67.85-75.64 (bullish)
Nat Gas 3.66-4.20 (bullish)
Gold 1 (bullish)
Copper 4.28-4.62 (bullish)
GOOGL 2 (bullish)
TSLA 631-672 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
