“Quiet, dark, alone. Always alone, even in a crowd.”
- Tim Grover
Kobe and MJ’s personal Coach wasn’t talking about US stock market bears.
He was talking about you. Yes, you when you are playing at the highest level - when you’re seeing The Game – when you are envisioning success. That will not happen if A) you can’t back out the clickbait #noise and B) execute on your #process.
“Alone in your head, alone with that buzz that no one but you can feel… no outside static. No distraction.” -Relentless, pg 51
Back to the Global Macro Grind…
#Boom goes the Bond Market. Boom goes the Global Equity market as the bells for a New Year ring!
Yep, New Year, same number on the scoreboard – another new ALL-TIME closing high for SPY (its 70th in the last year). No matter what your “narrative”, that’s what happens when you have:
A) Accelerating GDP GROWTH … and
B) No Fed Policy Mistake
Yep, 100% of the people who went bearish (on #Quad2 Long exposures) before the US economy re-accelerated in October got the most important thing in macro wrong. You know what that is – it’s The ROC baby – the rate of change of Real GROWTH.
And now, the Global Equity market is signaling the same thing as #Quad2 manifests across Europe in the Q4 data inasmuch as it’s all-over the #Quad2 pages in both Taiwan and Australia whose stock markets were up +1.4% and +1.9% overnight, respectively.
Can you have #Quad2 Globally as the USA slowly Phase Transitions into #Quad1 in Q1? Absolutely.
Just to refresh the scoreboard for your friends who wake up to reading narratives instead of cold hard facts (i.e. ROC numbers), here’s the current tally of the 30 features (economic data points) in the Hedgeye USA GDP Nowcast:
A) Q3 2021 US GDP GROWTH #slowed to 4.95% (we nailed that – it was #Quad3 in Q3)
B) Q4 2021 US GDP GROWTH has #accelerated to 5.73% (that’s #Quad2 in Q4)
In sequential (or quarter-over-quarter) terms (i.e. the way Old Wall will read headline GDP) that imputes +7.49% headline GDP growth that will be reported by the end of this month.
Consensus: The Atlanta Fed’s Nowcast went from 0% (in September) to +7.6% (now that the Q4 data has been reported). Thanks for coming out. Yes, we’re nowcasting a #GrowthSlowing by Q2 of this year. But the scoreboard doesn’t care about that, yet.
What the score of The Game is currently telling you is:
A) STOCKS = BIG HIGHER LOWS in my Risk Ranges with new ALL-TIME highs in play for some Countries, Sectors, Factors
B) BONDS = BIG HIGHER LOWS In my Risk Ranges with LOWER-HIGHS also dynamically in play
C) COMMODITIES = BIG HIGHER LOWS in my Risk Ranges with LOWER-HIGHS dynamically in play
Yep, you know when the coach goes ALL CAPS on you this early in the season that he’s getting serious!
What do BIG HIGHER LOWS mean for The Game’s score?
A) Falling Volatility
B) Less downside during corrections
C) Probability rising of more melt-ups
What’s the difference between LOWER and HIGHER HIGHS at the top-end of my Risk Range™ Signals?
A) Lower-highs are signaling either a consolidation of prior Cycle gains or the beginning of the end of The Cycle
B) Higher-highs are signaling The Cycle is still #GameOn and you better stay long those Asset Allocations
C) Higher-highs for SPY and Lower-highs for both Oil and the UST 10yr Yield = #Quad1 Goldilocks
Yep, since the beginning of me making up everything I’ve made up with The Singularity of the Hedgeye Signal & Quad #Process (#SHSQP, boom!), I’ve called #Quad1 Goldilocks for this very reason: Not too hot (not higher-highs), not too cold (not #Quad4).
Yeah, I know. You heard a loser-narrative that I “got all of this from Dalio.” Bahaha! Dude, Dalio didn’t write Principles until 2017. I started my career in 1999, started building my Signaling Process during the crash of 2000, and started Hedgeye in 2008.
Quiet, dark, alone. That’s what it was when I woke up at 4:35AM this morning. That’s what it still is now. And I am proactively prepared to execute the process that I built. Back out the noise and execute on yours.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.42-1.64% (bullish)
UST 2yr Yield 0.66-0.79% (bullish)
SPX 4 (bullish)
NASDAQ 15,328-16,008 (bullish)
RUT 2190-2297 (bullish)
Tech (XLK) 169.03-179.30 (bullish)
Consumer Discretionary (XLY) 196-213 (bullish)
Housing (ITB) 77.91-84.07 (bullish)
REITS (XLRE) 49.43-52.54 (bullish)
Shanghai Comp 3 (bullish)
Nikkei 28,073-29,400 (bullish)
DAX 15,297-16,227 (bullish)
VIX 15.11-20.55 (bearish)
USD 95.55-96.56 (bullish)
Oil (WTI) 70.22-78.77 (bullish)
Nat Gas 3.54-4.10 (bearish)
Gold 1 (bullish)
MSFT 326-350 (bullish)
AAPL 173-184 (bullish)
TSLA (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
