“It all started with my grandmother… I was only a kid when the doctors sent her home in a wheelchair to die.”
- Michael Greger, M.D.
Right next to a book titled Fractals & Scaling In Finance, I’ve had another brick of a book in my library that I’ve been reluctant to read – can you blame me? It’s called How Not To Die!
But… I’m always trying to find new ways to communicate to US stock market bears… so I cracked open the book earlier this week and was pleasantly surprised to find some anti-establishment content from a data-driven doctor.
“When I started this work more than a decade ago, I thought the answer was to train the trainers, educate the profession. But with the democratization of information, doctors no longer hold a monopoly as gatekeepers of knowledge about health… I’m realizing it may be more effective to empower individuals directly.” -Michael Greger, M.D.
Back to the Global Macro Grind…
Now before you go off the deep end on me and/or cancel because this guy Greger triggered you in some way about “scientifically proven” ways to prevent you from having a heart attack, chill out for a second…
Take a deep breath, and breathe… again, deep breath… and…
You got this. You didn’t wake up this morning with Zero Edge dancing in your head and panic in your chest about inflation being “transitory”… or the UST 10yr Yield going to 1.00% because it’s a round number, for that matter.
No, no, no. You’re alive and smiling at this note because you bought the damn dip in the NASDAQ again last week and just saw your net worth ramp back towards all-time highs! (New Home Prices in America inflated to all-time highs yesterday too)
How not to die of transitory Macro Tourist headlines or Fed forecasts is relatively straightforward. Don’t do what the establishment in this profession does. Empower yourself with an apolitical and data-driven process to beat their asses, daily.
Did that make it through everyone’s compliance filters?
Good. Moving along… yesterday was indeed a great day because, yes, I am still on the right side of the grass… and still learning to evolve. The Signals & The Quads delivered us another all-American #Quad3 day:
- NASDAQ volatility (VXN) collapsed (again) towards new Cycle Lows for this bull market, closing at 19.86
- NASDAQ’s closing price of 15,019 was an all-time closing high – all-time is a long time for those of you still alive
- GROWTH, as a Factor Exposure, pounded being long US Equity beta on the day too
Why does being long LARGE CAP QUALITY Growth work so well when the US economy is #Quad3? That’s simple. It’s worth more than the alternative melting ice cubes out there that are dying a very slow death…
Melting ice cubes don’t die. They just go away with time and space. Thinking about one of my core PA Shorts (i.e. a stock I can be short in my personal account because I don’t have an analyst covering it): Verizon (VZ).
Why no good in #Quad3?
A) Slow-growth Telecom is a short or underweight in #Quad3 (didn’t know that? Back-test it)
B) LEVERAGE (i.e. non-QUALITY) with no pricing power and rising costs = #bad in #Quad3
Yeah, you get it. Long GOOGL vs. Short VZ is trucking it in #Quad3. You’ll probably live a longer stock-picking life if you understand how The Pods (REVS and EBITDA) are directly affected, and/or infected in this case, by The Quads.
Given how “fundamentally” oriented the establishment is in terms of their narrative bias, I’m actually somewhat surprised that even they haven’t figured this out yet. Instead, they want to call this “mid cycle”, and get “defensive”?
Short Old Telecom and/or Consumer Staples (XLP) vs. Long Large Cap Tech + Utilities & REITS? Yep. That’s been #alpha.
Back to the evolution and growth thing which, again, is a great way not to die in this game:
A) GROWTH, as a Factor Exposure, was up another +1.2% yesterday taking its TRENDING return to +6.4% in 3 months
B) SLOW GROWTH was only +0.2% yesterday (in line with SPY) taking it’s return in the last 3 months to a paltry +1.4%
*mean performance of Top Quartile vs. Bottom Quartile, SP500 Companies
Now you can call your tax advisor and ask them about your TRENDING Full Cycle Investing returns being “transitory”… and I’m thinking that they’ll tell you that the US government is going to tax you on whatever you want to call them.
And you can call your Old Wall friends who need “certainty” in their investing process and tell them that you were reading an article @Hedgeye this morning about the year 1789 when Ben Franklin said “nothing is certain except death and taxes.”
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.21-1.37% (bearish)
UST 2yr Yield 0.21-0.26% (bullish)
SPX 4 (bullish)
RUT 2129-2270 (neutral)
NASDAQ 14,711-15,095 (bullish)
REITS (XLRE) 46.19-47.21 (bullish)
Tech (XLK) 153.33-158.68 (bullish)
Utilities (XLU) 67.78-70.10 (bullish)
VIX 13.41-19.86 (bearish)
USD 92.28-93.55 (neutral)
Oil (WTI) 61.96-70.96 (bullish)
Nat Gas 3.77-4.10 (bullish)
Gold 1 (bullish)
GOOGL 2 (bullish)
Bitcoin 43,260-50,392 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
