“Define success on your own terms.”
- Anne Sweeney
Sweeney was an exec at Disney. There’s nothing better in this world than creating something unique – something that’s never existed prior to your creation. Think about it – that’s who you are. Someone created you – there’s only one you.
There’s only one #Quad4. There’s only one #VASP Signal that front-runs it. There’s only one portfolio that you created that got you paid yesterday (or not). This is an exceptionally empowering moment in your market life. Embrace it.
When thinking about the positive energy associated with how well you did yesterday, Coach Dan Sullivan reminds us in The Gap and The Gain that “to truly get the feeling of progress, we need to base it on concrete facts.” (pg 33)
Back to the Global Macro Grind…
What are the facts? Yesterday was a historical #Quad4 day of market returns:
A) Your largest Asset Allocation (US Dollar) was up
B) Long-term Treasuries were up
C) Gold wasn’t down
D) Consumer Discretionary (XLY) got hammered for a -6.5% loss
E) Tech (XLK) kept crashing, down another -4.6%
F) High Yield (HYG) and Junk (JNK) got pancaked to new Cycle Lows
Without wavering, many of you have been positioning for this since January. The best part about these absolute and relative gains is that you’ve had MANY opportunities to press and/or re-load your positioning.
I often tell clients “don’t ask me about my conviction”, look at the timing and sizing of my positioning.
For our competition, they just want #Quad4 to end at this point. Soh-ree, with the Canadian accent, eh – in Treasuries #Quad4 is just getting started. That’s when we can finally make some dough on the long side, eh Jonesy Buds?
What are the ROC (rate of change) facts on that Long Duration (TLT) front?
1. Lower-highs in my Risk Range™ Signals
A) UST 30yr Yield 2.96-3.24%
B) UST 10yr Yield 2.77-3.11%
C) UST 2yr Yield 2.51-2.74%
2. Bearish @Hedgeye TRADE Risk Range™ Signal Breakdowns in:
A) UK 10yr Gilt Yield
B) German 10yr Bund Yield
C) USA’s 10yr Treasury Yield
3. Commodities continue to either signal
A) Lower Inflation Cycle highs in the case of Oil (WTI) …
B) Or TRADE and TREND #VASP Signal Breakdowns …
C) In the case of Copper, Lumber, Aluminum, Rubber, etc.
But, but, what about the Fed?
The Fed (and BOE in the case of UK 10yr or ECB in Bund terms) sets policy on:
A) The short end of the yield curve… not
B) The long-end
The long-end of the Yield Curve has a longstanding relationship with me and my friend Floki (the Fractal Signaling God).
Yes, this time, the Long-End had to deal with Putin’s inflation shocks. But now it has to deal with what got everyone who thought the “consumer is in great shape” yesterday: The Gravity. Yes, as Brad Pitt once said: “it’s the gravity that got them.”
What were the facts on the US Consumer since their “balance sheets” and full employment peaked (as they usually do, pro-cyclically, or looking backwards, at the peak of an economic cycle)?
- Real PCE (Personal Consumption Expenditures) #Slowed from +7.2% in NOV 2021 to +2.3% in MAR 2022
- Real Disposable Personal Income #Slowed from +0.4% at the #Quad2 Cycle Peak to -19.9% in MAR 2022
- Consumer Confidence #crashed to new Cycle Lows and Credit Card debt ramped like a Moon Coin
Yep, you were positioned for this. The Macro Unaware were not. They shut their funds down yesterday. And The Game goes on.
So do yourself a favor for the rest of the Full Investing Cycle and spend less-to-no life or cycle-time on what they “say” or think or do. Do what your #process is telling you to do.
This isn’t about them. Both the Old Wall and its media completely pooched #Quad4 because they always do.
This is all about you, me, and my #teammates. Our progress is concrete. Our Full Investing Cycle goals are crystal clear. And, as Coach Sullivan reminds us, “when we set our goals, they must be specific so we know when they’re accomplished.”
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 30yr Yield 2.96-3.24% (bullish)
UST 10yr Yield 2.77-3.11% (bullish)
UST 2yr Yield 2.51-2.74% (bullish)
High Yield (HYG) 75.43-77.63 (bearish)
SPX 3 (bearish)
NASDAQ 11,144-12,162 (bearish)
RUT 1 (bearish)
Tech (XLK) 127-139 (bearish)
Utilities (XLU) 70.20-72.83 (bullish)
Shanghai Comp 2 (bearish)
Nikkei 25,658-27,008 (bearish)
DAX 13,308-14,201 (bearish)
VIX 26.14-36.76 (bullish)
USD 103.01-105.02 (bullish)
EUR/USD 1.035-1.061 (bearish)
USD/YEN 127.46-131.20 (bullish)
GBP/USD 1.212-1.251 (bearish)
CAD/USD 0.764-0.781 (bearish)
Oil (WTI) 99.01-114.25 (bullish)
Nat Gas 6.97-8.70 (bullish)
Gold 1 (bullish)
Copper 4.02-4.31 (bearish)
MSFT 248-270 (bearish)
AAPL 137-148 (bearish)
AMZN 2006-2340 (bearish)
FB 183-205 (bearish)
GOOGL 2 (bearish)
NFLX 161-195 (bearish)
TSLA 652-775 (bearish)
Bitcoin 25,941-32,104 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
