“Almost all of this research goes against the familiar narrative.”
- Graeber & Wengrow
I’m still deep into this brick of a #history book, The Dawn of Everything, and I can’t find any evidence of #Quad4. That said, if the late American Anthropologist, David Graeber, met me for a beer at Toad’s in New Haven, CT, I think he’d get it.
As Graeber & Wengrow explain, “our objections can be classified into three broad categories. As accounts of the general course of human history, they”:
- Simply aren’t true;
- Have dire political implications;
- Make the past needlessly dull
They believe that their book tells a more “hopeful and interesting story; one which takes better account of what the last few decades of research has taught us… accumulated in archeology, anthropology, and kindred disciplines; evidence that points towards a completely new account of how human societies developed over the last 30,000 years.” (pg 4)
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where, instead of learning something about what the last few decades of research has taught me about Global Macro Economics, markets, and The Machine, many of you need me to explain the last few days of trading and how it will impact the future of both my Quads and your children!
Evidently, Thursday’s immediate-term TRADE #overbought signal in US Equity Volatility (at VIX 24) was accurate, but the read-through that this developing bear market was “oversold” was not.
Never forget that going back to pre-Tulip Bubble, market crashes happen from “oversold” levels. And right back into the week-over-week review of Global Macro markets we go, starting with Global Currencies:
- US Dollar Index was glaringly signaling #Quad4 again, up another +1.2% last week and remains Bullish TREND
- EUR/USD was also signaling #Quad4 last week, down another -1.5% = Bearish @Hedgeye TRADE and TREND
- Japanese Yen continues to crash/collapse, down another -1.4% vs. USD = Bearish TREND
- GBP/USD was down another -0.7% last week and remains Bearish on both my TRADE and TREND durations
- Russian Ruble bounced a big +6.6% vs. USD to +59% in the last month and -6% in the last 3 months
I have some sharp clients with sharp longer-term thoughts on Putin pegging the Ruble to grams of Gold. Since my #1 goal is to A) preserve and B) compound my hard earned capital, I like any narrative that is perpetuating higher Gold prices!
I’ve never considered Gold a “commodity.” I consider it a currency. Here’s what it did vs. my NASDAQ Short last week:
A) Gold up another +1.1% week-over-week taking its TRENDING Full Investing Cycle Return to +8.0%
B) NASDAQ down another -3.9% last week taking its TRENDING Full Investing Cycle Return to -8.2%
What’s a TRENDING Full Investing Cycle Return?
A) A duration of 3-months or more … and
B) This morning I am using 3-months, right on the screws
You know what one of your Top 3 Asset Allocation Longs (Gold in my case) being +8.0% vs. one of your Top 3 Macro Shorts (NASDAQ in my case) being down -8.2% in the last 3 months is? A: alpha.
It was a BIG alpha week for those of you positioned for #Quad4 in Q2 at the US Equity Sector Style level as well:
A) SHORTS: Consumer Discretionary (XLY) and Tech (XLK) were down another -3.1% and -3.8%, respectively
B) LONGS: Utilities (XLU) and Healthcare (XLV) stocks were UP another +1.9% and +3.5%, respectively
Instead of Long XLV, I’m long Mike Taylor’s PINK Healthcare ETF. I’ll have him on a Real Conversation with me today LIVE at the Hedgeye Investing Summit. I’ll have one with Kyle Bass and Mike Green too. #Boom. Please join a #BetterWay!
What else worked on the short side last week?
A) SHORTS: both European Equities in #Quad4 (DAX, EWI, etc.) and High Yield and Junk in the USA (HYG and JNK)
B) Oil and certain Commodities
No, I am not short of Oil, yet. But, thanking Floki and my Fractal gods, I am not long of it this morning either! Oil is down another -2.6% after breaking down through @Hedgeye TRADE support of $103.06 last week.
Disinflating The Inflation (i.e. our #Quad4 in Q2 Macro Theme) will NOT be evident in this week’s Macro Tourist reports of CPI and PPI. Nope, those are March numbers. March is not in Q2. Disinflation will be self-evident by THE END of Q2.
Alongside Oil (WTI) disinflating -1.0% last week, Lumber was down another -1.6% (to -23.8% in the last month), Rubber disinflated -2.6%, and Cattle prices disinflated another -4.1%.
Maybe that’s why “oversold” isn’t what oversold did. Fully loaded with Crypto Doge Coining it to the #MOON, we’re coming off one of the biggest inflations of Asset Prices since the aforementioned Tulip Bubble.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 2.22-2.78% (bullish)
UST 2yr Yield 2.24-2.59% (bullish)
High Yield (HYG) 79.65-81.96 (bearish)
SPX 4 (bearish)
NASDAQ 13,519-14,199 (bearish)
RUT 1 (bearish)
Tech (XLK) 149-159 (bearish)
Gold Miners (GDX) 37.48-40.08 (bullish)
Utilities (XLU) 72.94-77.72 (bullish)
Healthcare (PINK) 26.79-28.36 (bullish)
Shanghai Comp 3125-3290 (bearish)
DAX 13,907-14,761 (bearish)
VIX 18.01-24.88 (bullish)
USD 98.26-100.31 (bullish)
EUR/USD 1.079-1.103 (bearish)
USD/YEN 121.50-125.61 (bullish)
GBP/USD 1.301-1.319 (bearish)
Oil (WTI) 93.28-106.18 (neutral)
Gold 1 (bullish)
Silver 24.11-25.41 (bullish)
Bitcoin 41,173-45,693 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
