“I have to get up.”
- James Lawrence
Getting up to do this at 4:30 AM is one thing. Getting up to do 50 Iron Man’s in 50 days in 50 US States is entirely another. That’s the story of a beauty of a Canadian by the name of James Lawrence.
“You have to get up, love,” Sunny said gently. “It’s almost seven. You need to start running.”
That was on Day 17 in Kentucky where The Iron Cowboy from Calgary, Alberta went on to explain that “to complete today’s triathlon, I now had to run a full marathon, a task requiring 15,000 high-impact landings on each foot, or 15,000 more staple shots. In the best case scenario, the torture would last until one o’clock.”
Back to the Global Macro Grind…
Since the US stock market has already made more than 50 all-time closing highs here during #Quad2 and #Quad3 in the USA in 2021, the next question is can the NASDAQ do 50?
I used to work with a guy who, when angry, would throw his stapler across the room (that’s when we printed out Old Wall research and actually read it, so we needed staplers). 50 NASDAQ ATH’s will be like getting staples to a Perma Bear’s head.
Imagine, instead of waking up every morning to The Signals & The Quads (i.e. numbers that are constantly changing), you woke up to your narrative of a pending 10-12% “correction” and just spent your day looking for things that supported that?
That is not what we do. We got up this morning to the VIX signaling 14.09.
Now imagine VIX 14.09. And, wait on it, #NazVol 16.41. Just so you don’t have to guess, NASDAQ Volatility collapsing to new Cycle Lows like that should deliver the 40th going on 50th NASDAQ all-time closing high.
You see, what we do is a lot easier than narratives that sound easier to understand. We do fractal math.
On Day 1 of starting Hedgeye and showing people our #process, I showed whoever was crazy enough to care about becoming the #1 Independent Research provider to not only Wall Street, but The People… that in addition to doing math, we do:
A) History (i.e. rate of change time-series of The Cycle)… and
B) Behavioral Psychology
In order to try to simplify the complex, that gave birth to page 5 of The Hedgeye Process slide deck. As you can see here in The Chart (or picture really) of The Day, I expressed these 3 fulcrum points of the process with a picture of a Sierpinski Triangle.
Why? That’s easy. Having been on the buy-side as a both a Hedge Fund Analyst and Portfolio Manager for the first part of my career, I noticed something somewhat important: The Investment Landscape Has Evolved Tremendously…
Yes, I used tremendous in the title of page 4 of The Hedgeye Process deck before Trump did, bahaha
“Stock picking has given way to factor-picking and it’s our job as investors to embrace this sea change, rather than fight it”… with Old Wall “valuation” models and simple-one-factor Moving Monkey charts.
… So We Evolved Alongside It.
And alongside that daily, weekly, yearly, etc. Hedgeye Evolution I started using the futures & options markets as one of my BIG (hugely, tremendously, big and huge) BEHAVIORAL Psychology overlays.
I couldn’t care less at this point about what a human says markets “feel” like or where “it should be” based on some qualitative sentiment survey.
I really only care about A) where the market’s price is and B) where the volatility of the price (i.e. expectations of the future) is being priced relative to both The Quad and consensus market positioning (i.e. futures and options contracts).
Let’s show you 2 good examples of that this morning (1st one is US Equity Vol):
A) SPY’s implied volatility is trading at a +34% PREMIUM vs. 30-day realized … and
B) Industrials (XLI) and Utes (XLU) had implied vol blow out to +108% and +75% into month-end
That’s still, after 54 all-time SPY highs (or is it 55?), flat out bullish with all 3 of my Risk Range™ Signals for SPY, XLI, and XLU signaling higher-highs. The next example (Natural Gas) is maybe more of a beauty than the Iron Cowboy himself:
A) Since #Quad3 Inflation started in June, Natural Gas has been the biggest net SHORT position in ALL of Global Macro
B) As of the last night’s options pricing, UNG had an implied volatility PREMIUM of +157%! vs. 30-day realized
To put that in context, that UNG implied vol premium was only +31% 1-month ago from a much lower Natty Gas price. Wouldn’t it be nice if the likes of PE Powell had to be short “transitory” Nat Gas the whole way up?
That would wake his Old Wall ass up to TRENDING inflation in the morning!
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.22-1.38% (neutral)
UST 2yr Yield 0.20-0.26% (bullish)
SPX 4 (bullish)
RUT 2134-2313 (bullish)
NASDAQ 14,803-15,442 (bullish)
REITS (XLRE) 46.56-47.94 (bullish)
Tech (XLK) 154.88-160.97 (bullish)
Utilities (XLU) 67.87-69.91 (bullish)
DAX 15,759-15,994 (bullish)
VIX 14.09-18.91 (bearish)
USD 92.17-93.55 (bearish)
EUR/USD 1.168-1.187 (bullish)
Oil (WTI) 63.08-71.72 (bullish)
Nat Gas 4.01-4.55 (bullish)
Bitcoin 45,527-50,618 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
