“DON’T F*** IT UP.”
- Bill Campbell
Is that quote and my going ALL CAPs on you in the title of the Early Look clear enough? A: Yes. Crystal clear.
Sometimes (for a short period of time) I feel bad about swearing on The Macro Show. During the pandemic, kids were watching. And it just is what it is. I have kids too. That said, my oldest absolutely knows what an F-bomb is.
When I recently read The Trillion Dollar Coach – The Leadership Playbook of Silicon Valley’s Bill Campbell (by Eric Schmidt) I felt better about my Irish potty mouth. This guy makes me sound like an angel! And some of the world’s best loved him.
Back to the Global Macro Grind…
At 47 years old (and thank you for all the kind bday wishes yesterday), I just don’t have enough Cycle or life time left on the clock to give a f*** anymore. If people love or hate me, so be it.
“As Ben Horowitz puts it, you don’t want to channel Bill, because no one can be him. But I learned from him how to get better: a higher level of honesty, a better understanding of people and management.” -pg 28
Can I #GetBetter? A: Every day.
Can I find a better way to coach and communicate how to #excute on my Full Investing Cycle #process? A: Every day. In print, on TV, on Twitter, I am trying. And today is not a day to do nothing.
Some of our biggest Institutional Clients in Silicon Valley always ask me the same question that our biggest clients in Boston do: “I have to move 3-6-9 months ahead of your Cycle & Quad Shifts, so can you let me know when?”
WHEN. Yes, going ALL CAPS on you again, WHEN always matters more than WHY.
I can obviously tell you why. But WHEN matters more to, most importantly, me. I am in the same arena as our massive Institutional Clients, don’t forget. I run my own “family office” money. And I don’t want to “f*** it up.”
Post yesterday’s rate hike panic and the commensurate Doomberg terminal headlines this morning about “4 Fed hikes” and an “urgency” for rates to go higher, our proprietary @Hedgeye Inflation Nowcast continues to fall…
Why? That’s why. If the Fed “hikes” 4x this year, I think the 10yr Yield could drop 100 basis points from The Cycle high.
Heck, I think the UST 10yr Yield will drop at least 50 basis points from here if the Fed tightens into our #Quad4 in Q2 US economic #slowing view in… wait on it… Q2!
WHY?
A) Just reverse the numbers from what I was writing to you on this day LAST year
B) Instead of calling for the “Mother of all #Quad2s” in Q2 of 2021…
C) Now we’re done with #Quad2s and heading into disinflationary #Quad1 and/or DEFLATIONARY #Quad4
The more Fed hikes, the faster “risk on” markets are going to go from disinflation to deflation.
Write that down. And if you don’t get what RAISING RATES INTO A SLOWDOWN (i.e. #Quad4) does to the riskiest and most speculative assets (see Bitcoin or Cathie’s Longs for details), you’ll see it in a hurry. You already have.
I know there are a lot of big timers out there tweeting and talking about rates. But I’m bigger on #timestamping WHEN. So write this down too:
A) In June of 2020, I said “BUY INFLATION” (Commodities, specifically, as an Asset Class)
B) On September 23rd of 2021, I said “Get Long #Quad2 in Q4” and short Treasuries, Gold. Etc.)
C) On January 6th of 2022, I am saying BUY #RateSensitivity NOW
That’s it. See slide 58 of yesterday’s 114 slide Macro Themes presentation on why (For replay access email ). I’ll see you in 3-6-9 months.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.40-1.73% (bullish)
UST 2yr Yield 0.68-0.87% (bullish)
SPX 4 (bullish)
NASDAQ 15,003-16,111 (bullish)
RUT 2183-2295 (neutral)
Tech (XLK) 168.02-178.44 (bullish)
Consumer Discretionary (XLY) 199-211 (bullish)
Housing (ITB) 78.40-84.00 (bullish)
REITS (XLRE) 49.06-52.42 (bullish)
VIX 15.41-20.28 (bearish)
USD 95.61-96.47 (bullish)
Oil (WTI) 73.07-78.65 (bullish)
Nat Gas 3.51-4.07 (bearish)
Gold 1 (bullish)
Copper 4.21-4.49 (bearish)
Bitcoin 41,990-50,003 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
