“Let’s add autonomy and mastery to our stack.”
- Steven Kotler
In computer science a “stack” is an abstract type of data that has explicit elements with 2 main operations: Push & Pop. Push = adding elements. Pop = removing them. In terms of practical execution, that’s not unlike pushing or popping your portfolios.
Before you execute though, you have to have both process & principles that drive you. In what he calls “The Full Intrinsic Stack”, in addition to things like “curiosity, passion, and purpose”, Kotler is dead on adding “autonomy and mastery.”
“Autonomy is the desire for the freedom required to pursue your passion and purpose. It’s the need to steer your own ship. Mastery is the next step. It drives you towards expertise; it pushed you to hone the skills you need to achieve your passion and purpose” -The Art of The Impossible, pg 41
Back to the Global Macro Grind…
How good is that? I loved it. In fact I love anyone who legally challenges the received wisdoms of this world and not only builds upon them, but stands on the shoulders of mathematical and behavioral giants to crush things like Old Walls.
What are you stacking? Are you using some or all of the proprietary tools we’ve brought to our user-base? What parts of my Global Macro process augment yours? What parts don’t? I want and need to know the answers if I want to keep evolving it.
Evolving The #Process, that is…
Yes, building Hedgeye alongside my teammates for the last 14 years has been my story. You need to create your own. I can’t hold your hand each and every day. Even if I could, I don’t think you’d like that.
Think of everything we publish and produce every day as the ingredients to a Full Investing Cycle #process that I’m constantly changing with the passion and purpose to create a better way.
The ingredients themselves aren’t The #Process – the recipes that combine them are.
After a great 3 days of content creation at the Hedgeye Investing Summit (all 9 replays of Real Conversations are posted HERE) I am in what Kotler calls “flow.”
I’m also short on time and space this morning so here were my Top 3 Things (published daily to Institutional subs by 6AM):
Another US equity market panic comes and goes as the probability for a re-opening of #Quad2 in Q4 continues to rise…
- ASIA – right on the screws (from our immediate-term TRADE #oversold signals) our Top Asia Shorts bounced overnight with the Hang Seng +3.1% and KOSPI +1.8% while our #1 Risk Range™ Signal Strength EM Long, India (INDA), was up another +1.0% towards new Cycle Highs = +2.7% in the last month; Thailand (THD) +0.8% signaling #overbought too
- CURVE – unless you are new to the Signal & Quad #process, you know that both short-term and long-term rates rise in tandem in #Quad2 – that’s when the yield curve steepens too (sold all my LQD and I’m long IVOL for that exposure) – and we’re Long the Financials (XLF) vs. Short Utes (XLU) – keep doing all of that when tourists panic about Q3 news (it’s October)
- BITCOIN – nice to see one of my highest Volatility Adjusted Longs (realized volatility is why I call both it and my Ethereum Long “commodities”, from an Asset Allocation perspective) front-run the stock market, joining what are glaringly obvious #Quad2 in Q4 Signals from both the Bond and Commodities markets – it was #Quad4 I’d be short Bitcoin (pls don’t cancel)
Was this recent -3.8% move from SPY’s all-time closing highs a consolidation or a correction?
If it’s not another short-term consolidation like Oil and Energy Stocks had when Oil (WTI) corrected to $62/barrel back in August, how much larger of a “correction” is it going to be?
Imagine you sold Energy in AUG because your “charts” broke, btw?
My risk management #process never uses “valuation” as either a catalyst or a narrative on where or why markets correct. I use ROCs (rates of change) of volatility and fractal patterns that I built into my own models with passion and pride.
From here, I can get you another -2-3% correction in SPY or yet another all-time closing high.
What generally determines the difference between an ongoing correction from Cycle Highs is the market’s volatility adjusted outlook on what The (economic) Quads are going to be.
For China, that’s what we coined back in Q1 as #Quad3 Stagflation (6 months later it seems that consensus actually understands what that kind of nasty stagflation means, ha!).
For the USA the probability continues to rise that the economy re-accelerates from #Quad3 in Q3 to #Quad4 in Q2.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.42-1.60% (bullish)
UST 2yr Yield 0.25-0.33% (bullish)
SPX 4 (bullish)
RUT 2183-2275 (bullish)
NASDAQ 14,105-15,171 (bullish)
Utilities (XLU) 63.02-65.95 (bearish)
Energy (XLE) 50.74-55.93 (bullish)
Financials (XLF) 37.18-39.03 (bullish)
Shanghai Comp 3 (bearish)
VIX 16.63-24.91 (bearish)
USD 92.68-94.51 (neutral)
Oil (WTI) 73.22-79.16 (bullish)
Nat Gas 5.16-6.32 (bullish)
Gold 1 (bearish)
Bitcoin 43,534-55,847 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
