“Innovation is where the crazy people have stature.”
- Bill Campbell
He’d know. Campbell coached some real crazies (Steve Jobs). And, yes, I know. I can sound crazy. But am I? Probably. I like creating crazy stuff like #VASP Signals & Quads. I dropped a record 7 F-bombs on the Macro Show yesterday too.
Don’t confuse colorfully Canadian Irish language with #process, product, and/or results. In The Trillion Dollar Coach, Google’s Eric Schmidt reminded me that “the purpose of a company is to bring a product vision to life.” (pg 70)
For me, my family and firm are my life. For going on 15 years now, my Hedgeye vision has been to bring Hedge Fund quality process & real-time research to anyone who wants to access it. The Call @Hedgeye (our Morning Meeting where I go around the horn with all of our Research Sector Heads) is now LIVE @HedgeyeTV pre-market at 7:45AM ET.
Back to the Global Macro Grind…
Got #Quad4 timing, vision, and positioning yet? Good. It worked, big time, yesterday:
A) Bond Yields stopped going up
B) Gold (GLD) ripped higher … and
C) Staples (XLP) and Utes (XLU) were green in a sea of SPY red
I’ve spent lots of creative-content-time telling you what my #VASP Signals are saying, but here it is again:
A) USA: Narrow #Quad4 in Q1 is the highest conditional probability
B) USA: Deepening #Quad4 in Q2 has a 93.8% conditional probability
C) ROW: France (EWQ), Italy (EWI), Indonesia (IDX), Thailand (THD), and Israel (EIS) = #Quad1 LONGS
Here’s our refreshed Quad Model Nowcast that gives us the aforementioned #Quad4s:
A) Q4 of 2021 GDP = +5.51% year-over-year GDP (which imputes +7% headline)
B) Q1 of 2022 GDP = slowing to +5.17%
C) Q2 of 2022 GDP = slowing faster to 4.04% (which imputes +2% headline GDP)
In other words, the #PeakCycle peacocking by The Fed and all-star sell-siders (who completely missed getting long of both rates and #InflationAccelerating at this time last year) was during #Quad2 in Q4’s #acceleration to +7% GDP growth.
And in t-minus 1-month, The Machine will be discounting US GDP #slowing from +7% to +2%...
I know what consensus GDP and Bond Yield talk is saying (i.e. not that). It’s easy to summarize because consensus CFTC futures and options positioning already reflects their non-#Quad4 economic view:
A) UST 10yr Treasury net SHORT position = -291,392 contracts … and
B) That scores a -2.04x on a 1-year z-score, which is the most consensus position in Global Macro… as
C) A net LONG position in SPY of +92,514 contracts remains (which scores +0.90x on a 1-year z-score)
If headline (q/q SAAR) GDP #slows anywhere close to where we’ve been very close nailing #QuadShifts now for the last 6 quarters, are you really going to buy a newly minted Bearish SPY TREND and short 10yr Notes with the crowd here?
What’s the upside in one’s Short UST 10yr Bond position?
A) My Risk Range™ Signal just signaled its 1st lower-daily-high on UST 10yr at 1.88%... as
B) Consensus bets actually (and momentarily) went to GREATER than 4 Rate Hikes 24 hours ago… so
C) If you think the Fed can hike 2x never mind > 4x into this #Quad4 setup, you know what?
In a different way, you’re just like me. You’re crazy too!
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.65-1.88% (bullish)
UST 2yr Yield 0.82-1.07% (bullish)
SPX 4 (bearish)
NASDAQ 14,106-15,216 (bearish)
RUT 2012-2191 (bearish)
Tech (XLK) 158.15-169.01 (bearish)
REITS (XLRE) 47.03-50.21 (bullish)
Consumer Staples (XLP) 75.63-77.78 (bullish)
VIX 17.96-25.99 (bullish)
USD 94.60-96.51 (bullish)
Oil (WTI) 78.38-86.99 (bullish)
Nat Gas 3.58-4.77 (bearish)
Gold 1 (bullish)
Bitcoin 39,536-44,969 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
