“Blockbuster is a thousand times our size.”
- Reid Hastings
For those of you who love non-fiction narratives, I’m reading No Rules – Netflix and The Culture of Reinvention. It’s a healthy reminder to crazies like me (that it’s ok) who have spent every waking hour for going on 15 years disrupting a broken industry.
“The CEO of Blockbuster, John Antioco, who was reputed to be a skilled strategist welcomed us graciously. Sporting a salt-and-pepper goatee and an expensive suit, he seemed completely relaxed...
We suggested Blockbuster purchase Netflix, and then we would develop and run Blockbuster.com as their online video rental arm. Antioco asked how much? Our response - $50 million. He flatly declined.”
Back to the Global Macro Grind…
So a bunch of suits walk into a Wall Street room and give us their 2022 “inflation forecasts.” The dude at Deutsche Bank says, confidently, we’re at 7.0% CPI. The same “skilled strategists” of ye Olde Wall were thinking 2.0% at this time last year.
Thanks for coming out.
Yep, I have bad days. I have bad weeks. But good lord almighty, that is really bad – like Blockbuster bad. And will the Old Wall banks either build or buy a #BetterWay to Nowcast both GROWTH and INFLATION? Nope. We’re not for sale for $50M.
The only thing worse than being an Old Wall (or Fed) Econ is being the media that holds these guys as their high priests.
To their defense, CNBC, Bloomberg, etc. don’t have either a Go Anywhere Global Macro Risk Management #process or players on the team who are smart enough to parrot precisely what Hedgeye says and does.
We, on the other hand (not unlike Netflix), have our own proprietary process that generates our own content that we distribute directly to both Institutional and Individual consumers without the need for $1 USD in advertising revenue.
No. I’m not trying to sell you my company. I am trying to remind you why you pay for this.
You’re not paying to wake up this morning to reams and streams of #clickbait on how “Inflation is a problem” and “Commodities are the next great Asset Allocation.” That news is almost as old as John Antioco himself.
Antioco is 72 years old and running Red Mango. But if he was an Old Wall Strategist he’d still be gainfully employed and probably peacocking on CNBC about inflation this morning. These people generally don’t get fired. We’re grateful for that.
Back to tomorrow’s Global Macro GROWTH & INFLATION news instead of yesterday’s Peak Cycle Inflation reports:
A) China’s Producer Price Index (PPI) #slowed, big time, from its INFLATION Cycle peak
B) China’s PPI (which leads CPI, or tomorrow’s news) #slowed from +12.9% in NOV to +10.9% in DEC
C) China’s CPI #slowed from +2.3% in NOV to +1.5% in DEC
And Asian Bond Yields fell on the “unexpected” disinflationary news. Stocks rallied, taking the Shanghai Composite Index right back up to the particularly important @Hedgeye TREND level of 3591.
Why does this matter?
A) China was the 1st major economy to signal #Quad3 STAGFLATION @Hedgeye at this time last year
B) Zero of the Consensus Inflation Econs of today made that timely and accurate Cycle Call on China last year
C) By the end of Q2 2021, one of the biggest Asian Hedgies (sorry Bill) blew up being levered long in #Quad3
And yes, those #Quad3 blowup factors (#Quad3 is the best Quad to be SHORT China Internet/Growth/ Consumer) are now your BASE EFFECTS going forward. That’s why China remains the top candidate to go from short to long @Hedgeye Macro.
And yes, yesterday, I said I was shorting China. Today I will cover it. Got a problem with me changing my mind?
Ever play Squid Game? I haven’t. I don’t need to take that kind of risk. Changing my mind and positioning as The #VASP Signal & Quads do is what I do. That’s why our subscribers will tune into the next episode of The Macro Show @HedgeyeTV!
What else particularly mattered (from a ROC Macro data perspective) in the last 24 hours:
A) INDONESIA: Retail Sales #accelerated to +10.8% y/y, good for its 3rd sequential #Quad2 in Q4 #acceleration
B) ITALY: Retail Sales #accelerated to +12.5% year-over-year (y/y) for its 1st sequential #Quad2 #acceleration
C) USA: NFIB Business Optimism #accelerated to 98.9 in DEC, good for its 3rd sequential #Quad2 in Q4 #acceleration
Yes, we remain long of Indonesian (IDX), European (EWQ and EWL), and (certain) American Equities…
Because we were the only Wall Street content producer to generate a #Quad2 in Q4 economic Re-acceleration Signal when Consensus Growth Econs went bearish during our #Quad3 in Q3 Stagflation slow-down call.
Sequentially, particularly in the USA, the probability continues to rise that December was the sequential peak in growth. But I reserve the Independent Research right to change my mind on that as either The Signals or The Quad data changes.
I definitely won’t be calling Antioco or the dude at D Bank for their “forward looking” strategies on this.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.46-1.86% (bullish)
UST 2yr Yield 0.69-0.96% (bullish)
SPX 4 (bullish)
NASDAQ 14,643-16,026 (neutral)
RUT 2143-2292 (bearish)
Tech (XLK) 162.79-177.97 (bullish)
Consumer Discretionary (XLY) 195-211 (bullish)
Housing (ITB) 74.02-85.00 (bullish)
REITS (XLRE) 48.03-52.64 (bullish)
Shanghai Comp 3 (neutral)
DAX 15,701-16,291 (bullish)
VIX 15.30-20.73 (bearish)
USD 95.47-96.53 (bullish)
EUR/USD 1.126-1.139 (bearish)
Oil (WTI) 74.33-81.58 (bullish)
Gold 1 (bullish)
NFLX 514-583 (bearish)
Bitcoin 39,139-47,903 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
