“Perseverance, instinct, and persuasiveness – the three qualities that enabled…”
- Jeff Benedict
Those were the 3 qualities that, in The Dynasty, Jeff Benedict argues “enabled Kraft to build and sustain the longest-running dynasty in American team sports history”… and that they “were part of his DNA long before everyone knew his name.” (pg 10)
If you don’t like Bobby Kraft or The New England Patriots, please don’t cancel.
If you didn’t like The Game being hard, that’s ok. When you read the inside story about how Kraft built both his business and brand, he definitely didn’t like making some of the decisions he had to make either. That’s what winners playing at the highest level do.
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where the summer has heated up and we’re still measuring and mapping both The #VASP Signals and The Quads for you. This week you get to see the Q2 GDP print that the Fed is aggressively hiking into.
As always, let’s start with dispassionately and apolitically contextualizing what the Global Currency market sees:
- US Dollar Index had a Counter @Hedgeye TREND correction of -1.2% last week and remains Bullish TRADE and TREND
- EUR/USD had a Counter @Hedgeye TREND bounce of +1.3% last week and remains a SELL (Bearish TRADE and TREND)
- Japanese Yen had a big Counter @Hedgeye TREND bounce vs. USD of +1.8% and remains a SELL as well
- GBP/USD had a Counter @Hedgeye TREND bounce of +1.2% last week and remains Bearish TRADE and TREND
- Colombian Peso was down another -2.4% vs. USD taking its TRENDING Currency Crash to -13.5% in the last 3 months
- Pakistan’s Rupee was down a big -7.7% vs. USD taking its TRENDING Currency Crash to -18.0% in the last 3 months
So, from a risk management and #process perspective, there are 2 things you should see in those 6 things:
- Counter @Hedgeye TREND moves are to be faded until the TREND Signal changes (which front-runs Quad Shifts)
- TRENDING moves = 3 months or more (get those right and you preserve & protect your hard earned capital over time)
What does someone in Colombia or Pakistan know about SPY’s 50-day Moving Monkey chart “looking good” to US based Macro Tourists? A: Not much. But my caddie did on Saturday morning – he lives in Bridgeport, CT and travelled there with US Dollars.
Colombian Filet Mignon for 45,000 pesos (or $11 US Dollars) anyone? How about we bring the fam to Pakistan? (no thanks)
With all of the uniquely American FOMO and panic-attack CNBC market commentary distracting some of you, you may be missing that it’s not just USA signaling #Quad4. It’s GLOBAL #Quad4 with plenty of Currency and Commodity Crashes still in play:
- CRB Commodities Index had a Counter @Hedgeye TREND bounce of +1.3% last week to -7.6% in the last 3 months
- Oil (WTI) barely bounced +0.1% last week and remains Bearish TRADE and TREND, having crashed -23% since March
- Copper’s +3.6% Counter @Hedgeye TREND bounce last week has its TRENDING Crash at -27.4% in the last 3 months
- Corn didn’t bounce – it was down another -6.5% last week taking its TRENDING Crash to -22.1% in the last 3 months
- Lumber didn’t like its -9.8% weekly #Quad4 move, taking its TRENDING Crash to -34.3% in the last 3 months
- Wheat didn’t bounce either, down -2.3% last week, taking its TRENDING Crash to -29.3% in the last 3 months
TRENDING (going all CAPS on you before you chase another weekly or monthly chart) CRASHES are not the things championship and dynastic portfolios are made of. Above all else, avoid throwing those proactively predictable interceptions.
Don’t worry, I’ll get to those beloved US “Sta-hhh-ks!” momentarily. But before I do that, what else happened last week?
A) UST Bond Yields continued to break-down on the long end of the curve with 10s down -16bps week-over-week
B) UST Yield Curve continued to signal #RecessionRisk Rising, inverting to -22bps (basis points) on 10s minus 2s
“But, but… KM, High Yield (HYG) and Junk (JNK) bounced alongside QQQs and I just have to say, July has been tough…”
Yep, I hear you brothers and sisters of the Hard Earned Capital realm, life is tough. And in the words of Duke Coach, Kara Lawson, you need to be someone who “handles hard better” (if you want to be the best at the highest level). Show that video to your kids btw.
Was it hard to re-gross (short more after covering-some lower) these shorts last week?
A) US Consumer Discretionary (XLY) Short at +6.8% on the week, taking its TRENDING 3-month loss to -12.0%
B) US Tech (XLK) Short at +3.7% on the week, taking its TRENDING 3-month loss to -4.1%
C) Bitcoin (BITO) Short at +8.0% on the week, taking its TRENDNING 3-month CRASH to -42.9%
Nope. It wasn’t easy. But it wasn’t hard. Because, like Bobby Kraft’s Patriots or Kara Lawson’s Blue Devils we have built a behavioral #proccess that handles hard well.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 30yr Yield 2.97-3.22% (bullish)
UST 10yr Yield 2.75-3.09% (bullish)
UST 2yr Yield 2.96-3.30% (bullish)
High Yield (HYG) 73.27-77.25 (bearish)
SPX 3 (bearish)
NASDAQ 10,907-12,095 (bearish)
RUT 1 (bearish)
Tech (XLK) 125-140 (bearish)
Utilities (XLU) 68.05-70.44 (neutral) `
Shanghai Comp 3 (bearish)
Nikkei 25,921-28,113 (neutral)
DAX 12,416-13,494 (bearish)
VIX 22.11-28.95 (bullish)
USD 105.98-108.71 (bullish)
EUR/USD 0.996-1.029 (bearish)
USD/YEN 136.01-139.49 (bullish)
GBP/USD 1.179-1.206 (bearish)
Oil (WTI) 93.14-101.30 (bearish)
Nat Gas 5.90-8.60 (bullish)
Gold 1 (bearish)
Copper 3.16-3.45 (bearish)
Bitcoin 18,211-24,714 (bearish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
