“I hated the Yankees with all my heart, even to the point of having to confess in my first holy confession that I wished harm to others.”
- Doris Kearns Goodwin
When I read that quote from Goodwin, I was like really? She’s one of my favorite historians… so wishing Yankees would “break arms and ankles”, took me by surprise. Then I re-read it and realized that she must have been a 7 year old Catholic Sox fan at the time!
God willing, with two feet on the floor every morning, I confess that I sometimes pray that my day doesn’t end the way my haters would like (i.e. being hit by a bus). Some of these people are on a real mission. And this might sound perverse, but I like that.
We used to have this hedge fund “client” I’d call “The Squid.” He wasn’t long for this game. But while he was at it, wow, did he hate me and any call I’d make. He even started to troll me on Twitter at 5AM, daily. His firm shut that down, then fired him.
Back to the Global Macro Grind…
I guess I earn most of the love and hate that I get. I was fired by the last hedge fund I worked for too. It wasn’t for tweeting. It was for losing money. That’s The Game. There is a real-time score that most of us are accountable to.
For those of you who don’t know that story, not that I remember it or anything, but I was fired on November 2nd, 2007 for “being too bearish”… so I started Hedgeye from that market top and didn’t go bullish until April of 2009.
Going on almost 15 years later, I have been right and wrong on a lot of things. The amount of mistakes I’ve made building the business is a number that I can’t even count. Every market call mistake I’ve made is #timestamped. Call The Squid, he’ll give you a full audit.
The best thing about being wrong on this transparent content platform is that I can’t stay wrong for long…
Most of the time that I am about to miss something big like a Quad Shift (which is unacceptable), I start losing money. Then both subscribers and trolls will pepper me, reminding me of those mistakes (as they should). Then I have a decision to make:
A) Stay wrong or
B) Change my position
That’s really what this job is all about. If you “feel” anything about having to “be right”, you’re probably about to stay wrong for longer than you should. Most people ride losing narratives and market positions for far longer than I do.
If you’re just tweeting about one-way macro theories, that’s different. Those are often the click-bait types that A) don’t run real money and B) I can really trigger. Why? My numbers disprove their narratives and ruin their marketing pitch.
Yep, it sucks… but someone’s got to hold both the Old Wall and the self-professed “Macro” stars to account.
So, as bond yields continue to breakout and SPY ramps back to within 0.4% of her all-time closing high, who is going to capitulate first and get off the Deflation/Duration/Defensives narrative and get on the #Quad2 in Q4 MFO bus?
Does it really matter what these all-stars do? No. What matters is what you do.
Most of you are what I call the Silent Majority of Hedgeye subscribers. You don’t show me love or hate. You just consume our content and consider my risk management #process within the context of your own. I love that.
Some of you are quite vocal about your positioning and Asset Allocations. I love that too.
You see, I’m a lover not a hater, eh. Admittedly, I love my Quads like I do my 4 kids. They were all born here @Hedgeye after I got fired. And now I guess I can’t be fired. So there’s some staying power in that!
Instead of a 20% US stock market “correction”, SPY is already up +4.9% for #Quad2 in Q4 to-date with the Top 2 Sector Style Returns coming from our Top 2 Risk Range™ Signal Strength positions: Energy (XLE) +11.4% and Financials (XLF) +6.3% OCT to-date.
Bond Yields continue to breakout alongside our Long Bitcoin position at $64,000. The Yield Curve continues to steepen alongside both new Cycle Highs for Commodities and Commodity Country ETFs like Russia (RSX) and Norway (NORW).
How much longer can #Quad2 in Q4 last? We’ll see. But, fortunately, I’m still on the right side of the grass and Q4 just started.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.50-1.68% (bullish)
UST 2yr Yield 0.31-0.45% (bullish)
SPX 4411-4546 (bullish)
RUT 2 (bullish)
NASDAQ 14,605-15,290 (bullish)
Tech (XLK) 150.68-159.93 (bullish)
Utilities (XLU) 63.40-66.47 (bearish)
Energy (XLE) 54.92-59.38 (bullish)
Financials (XLF) 38.26-41.02 (bullish)
VIX 14.19-20.20 (bearish)
USD 92.97-94.44 (bearish)
GBP/USD 1.354-1.382 (bullish)
CAD/USD 0.795-0.816 (bullish)
Oil (WTI) 78.31-83.96 (bullish)
Nat Gas 4.97-6.00 (bullish)
Gold 1 (bearish)
Copper 4.33-4.89 (bullish)
Bitcoin 51,604-64,297 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
