“All over the world, rent, housing prices, fuel, food, and many other costs are rising.”
- Jeff Booth
That’s a matter of fact quote about inflation by a guy who believes in longer-term deflation. I had a Real Conversation @HedgeyeTV with Jeff Booth yesterday about everything from cyclical inflation to secular deflation and Bitcoin. Take a look at the full conversation here.
Jeff is a good Canadian guy who was born in Regina, Saskatchewan. The aforementioned quote is from a thought provoking book he published last year titled The Price of Tomorrow – Why Deflation Is The Key To An Abundant Future.
Back to the Global Macro Grind…
Can you maintain a “longer-term” view that is the opposite of your intermediate-term Asset Allocation and portfolio positioning? Most people in #HedgeyeNation can. That’s why they’re winning.
For those of you who are new to our proprietary & stochastic nowcasting #process for not only the US economy but 50 other countries that report GROWTH and INFLATION data:
A) #Quad2 is when you have the ROC (year-over-year rate of change) on GROWTH and INFLATION #accelerating
B) #Quad4 is when you have the opposite of that (i.e. GROWTH and INFLATION #decelerating at the same time)
Once my Signaling Process suggests that we are about to re-enter #Quad4 DEFLATION, I will short mostly everything that I am long right now (and buy mostly everything that I am short).
In the meantime, I’m doing what my friend Mike Wilson @MorganStanley finally told clients to do this morning – “riding the wave” to 4800 on the SP500!
Actually my #Quad2 in Q4 melt-up call (made on September 23rd) on SPX has a real-time “target” that only has +0.8% of immediate-term upside to 4743. If/when we see that print, probability rises for a -3% correction from there.
To put this mind numbing melt-up (for the bears who “went to cash” in September) in context:
A) Yesterday was the 8th straight up day for the SP500 (that hasn’t happened since 1997)… and
B) It was the 16th up day for SPY in the last 18 days of #Quad2 in Q4
In addition to Bitcoin ramping north of $68,000 this morning (which is a new all-time high), yesterday was also the 65th, 44th, and 17th all-time closing highs of 2021 for SPY, NASDAQ, and the Russell 2000.
What’s the latest on US GROWTH and INFLATION?
A) GROWTH: US covid case counts #slowed another -2% last week (vs. +3% in the week prior)
B) INFLATION: Used Car prices #accelerated another +9.2% in OCT to a freshly squeezed all-time high
As I like to remind people who do narratives instead of ROC numbers, all-time is a long time. The Manheim Used Car Index has NEVER #accelerated in OCT vs. SEP. This +9.2% sequential #inflation = +38.1% year-over-year inflation.
Remember the time when PE Powell called out the “cooling off” of used car prices at his Jackson Hole Zoom? Lol
Powell isn’t an analyst. He’s a politicized lawyer who is on the ropes after another one of his Fed Governor buddies, Randy Quarles, resigned as the Vice Chair of Supervision yesterday.
Imagine these guys and gals at the Fed and Treasury had me as their forecasting supervisor? The Price of Tomorrow’s #Quad4 Deflation would come in a hurry.
As a reminder, we’ll be hosting our Q4 Mid-Quarter Macro Themes Update presentation LIVE @HedgeyeTV at 11AM ET. If you’d like access ping .
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.44-1.64% (bullish)
UST 2yr Yield 0.38-0.54% (bullish)
SPX 4 (bullish)
RUT 2 (bullish)
NASDAQ 15,306-16,187 (bullish)
Tech (XLK) 159.65-169.26 (bullish)
Utilities (XLU) 65.91-67.60 (bearish)
Energy (XLE) 56.54-60.00 (bullish)
Shanghai Comp 3 (bearish)
DAX 15,670-16,195 (bullish)
VIX 14.50-17.95 (bearish)
USD 93.20-94.51 (bearish)
CAD/USD 0.801-0.812 (bullish)
USD/CHF 0.908-0.920 (bearish)
Oil (WTI) 79.03-85.91 (bullish)
Gold 1 (bearish)
Bitcoin 61,022-69,790 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
