“Ignorance more frequently begets confidence than does knowledge.”
- Charles Darwin
That’s a great quote that Bloomberg, CNBC.com, and Zero Edge should have pinned at the top of their websites. There’s a bubble in bear market click-bait.
What is it going to be this morning? “US Default Risk” or Tech broke the 50-day Moving Monkey? Last week it was “Evergrande Lehman Contagion”… and what did that story do since?
All the while, the Raging Bull Markets in what these Old Wall media outlets have completely missed (i.e. in both Commodities and US Real Estate) inflated to fresh new Cycle Highs yesterday.
Back to the Global Macro Grind…
In Chapter 2 of Think Again, Adam Grant explains the difference between “The Armchair Quarterback and The Imposter.” Think about it like Macro Tourists vs. Mucker.
Yep, that little Mucker (that’s with an M) and his apolitical and data-driven teammates just took UP their US GDP and Inflation Nowcasts for #Quad2 in Q4 like both the Commodities and Bond Markets did.
Note, that says Bond Markets (that’s with a S). Did the German Bund or UK 10yr Gilt Yield breakout on “US Default Risk” or Germany’s Import Prices ripping to +16.5% year-over-year this morning? A: #Quad2.
That’s the highest number ever, and ever is a long time.
How about what not only got ZERO headline “news” yesterday but is one of the Top 3 Drivers of our US INFLATION Nowcasts for the coming months and quarters: US HPI (Home Price Inflation):
A) US National Home Price Inflation #accelerated to an eye-popping +19.7% year-over-year growth in July…
B) That’s up from the prior record of +18.6% growth and that’s against EASING base effects
As even the Blind Macro Squirrel can probably see (if you whisper our numbers driven narrative in their ear) on slide 40 of last week’s Q4 Macro Themes deck, HPI leads US Inflation’s (CPI) OER (Owner’s Equivalent Rent) by 6-12 months.
The good news is that PE Powell gets it now. His own Dallas Fed office (which is now vacant due to Kaplan being “distracted” by no longer being able to front-run Fed moves trading Spooz) just wrote a white paper on it!
If you’re looking for some knowledge that Hedgeye has been dropping on subscribers for a long time now, the Dallas Fed finally realized that US RENT (OER) INFLATION FOLLOWS US HOME PRICE GROWTH ON A LAG.
And what follows both the steepening of the UST Yield Curve and rising long-term rates, on a lag? A: Tourists and the Fed.
Btw, why is PE Powell starting to “get it?”
A) The unaccountable disgrace by his two senior pals at the Fed (Kaplan & Rosengren) got him thinking?... and/or
B) He’s thinking about his legacy of “transitory” bs that was supposed to abate by now? … And/or
C) his next job in PE?
Never mind Elizabeth Warren calling him a “dangerous man” yesterday. She’s obviously politicized and just wants to get him A) out of there and B) on with full-scale MMT in 2022…
That part of the US government stoked Asset Bubble is going to be fun to risk manage. For me though, in market timing terms, that’s a few careers away at this point. This morning it’s all about fading a Bubble in Bear Market Narratives.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.36-1.55% (bullish)
UST 2yr Yield 0.24-0.32% (bullish)
SPX 4 (bullish)
RUT 2189-2292 (bullish)
NASDAQ 14,506-15,315 (bullish)
Tech (XLK) 150.06-159.12 (bullish)
Utilities (XLU) 63.02-66.71 (bearish)
Energy (XLE) 48.45-54.74 (bullish)
Financials (XLF) 37.03-39.12 (bullish)
VIX 15.40-25.36 (bearish)
USD 92.44-93.87 (bearish)
Oil (WTI) 71.08-76.48 (bullish)
Nat Gas 4.89-6.13 (bullish)
Gold 1 (bearish)
Copper 4.09-4.40 (neutral)
MSFT 282-308 (bullish)
Bitcoin 40,107-48,263 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
