“If there is so much noise, it’s because different raters have completely different ideas.”
- Danny Kahneman
Before you hyperventilate alongside a crowd of Macro Tourists during this morning’s CPI release, take a step back to 7-8 months ago and breathe. That’s it, as my wife taught me many years ago (when we had our 1st of 4 kids), “Keith, settle down… deep breaths…”
If you could change your inexperienced behaviors and bad-decision-making in your life, would you? On the really bad stuff, I certainly would. What about in your portfolios? If you could change drawdowns and crashes of your hard-earned wealth, would you?
Of course you should.
Back to the Global Macro Grind…
Get the intermediate-to-long-term Cycle right and your capital preservation will be alright. Until you learn that lesson in risk management, you can’t compound your hard-earned capital like the best players in The Game do.
Post The CPI Noise this morning, take some time to ask yourself these critical questions about The Cycle:
A) Did you get LONG of INFLATION in June of 2020 and buy Commodities (the best hedge and Asset Allocation vs. inflation)?
B) Did you SELL GROWTH, as a major #Quad2 Asset Allocation, at the end of 2021?
C) No matter what The CPI Noise today, are you going to be buying #Quad4 Recession Asset Allocations today?
As Druckenmiller reminds any Tourist who’d like to do macro, “never, ever, invest in the present.” Unlike most, the #HedgeyeNation Community can say that they got the answers to questions A and B right. Part C is investing in the future.
Good news for those of you who subscribe to our Macro Pro & Institutional Research content/services: you only have to endure The Noise on CNBC for 2.5 hours post the CPI print until you get 154 slides of new and/or updated long-term Macro Cycle content.
If you’d like access to our Mid Quarter Macro Update presentation at 11AM ET @HedgeyeTV ping .
Here’s a sneak peak at The Cycle content that we haven’t yet published for the Macro Aware to see:
A) No matter what the CPI report says today, Recessionary Cost of Living Pressure isn’t going away anytime soon
B) Small Business in America is now registering Earnings & Expectations not seen since the lows of the GFC
The GFC = The Great Financial Crisis. Remember that? That’s the big US recession and market crash “call” that this thick-skulled Mucker made using the same model he’s using today. Now I just have a much bigger (and better) research team!
Since NO CYCLE is the same (and most who missed calling for the prior CRASH keep looking for that one), here are some important takeaways you should have from this morning’s Macro Cycle deck:
A) The GFC was a Wall Street Crisis that ended up landing on Main Street
B) This is a Main Street Recession that will eventually be figured out by both the Fed and Wall Street
While most “public” CEOs won’t admit it publicly yet, they’re still executing on their main business (i.e. selling you stock). Don’t listen to what they say about The Cycle, watch what they do. Elon, nice sales on $6.9B in stock, bud.
This Phase Transition of The Cycle isn’t my opinion. Slides 34-36 of this refreshed ROC deck are empirical and reported facts:
- Slide 34 = since our last deck, CEO Confidence #slowed to new Cycle Lows in July
- Slide 35 = since our last deck, Small Business Expectations continued to crash to all-time lows
- Slide 36 = new slide not in our last deck is the worst since The GFC
So, since my vision and goal after leaving the Old Wall in 2007 was to be there for The People during crashes, please send slide 36 (today’s Chart of The Day) to your friends & family on me. If any of them run a real business, this won’t be new news to them:
A) Small Business Earnings (trailing 3 months) have already hit recessionary levels (data goes back to 1986)
B) Small Business Sales Expectations (expected next 3 months) are at lows not seen since The Great Financial Crisis
This isn’t 1982. This is 2022.
In the next 3 months you’ll look back on what you did today and score your performance. Don’t forget that the Hedgeye Nowcast for a #Quad4 Recession isn’t just the next 3 months. It’s the next 3 QUARTERs after the 3 months that will constitute Q3 of 2022.
And if anyone who has never built or run a Small Business in America wants to spew something to the contrary while they sell their stock, I think you should call them out on that.
While The People who run Small Business in America may not be as big-time as those running the Wall Street #BubbleCaps, they do represents 98% of American businesses. They’d know better than people who have never accurately called for a market crash too.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 30yr Yield 2.90-3.09% (neutral)
UST 10yr Yield 2.57-2.96% (bearish)
UST 2yr Yield 2.78-3.40% (bullish)
High Yield (HYG) 75.58-78.72 (bearish)
SPX 3 (bearish)
NASDAQ 11,808-12,752 (bearish)
RUT 1 (bearish)
Tech (XLK) 137-148 (bearish)
Utilities (XLU) 70.95-75.77 (bullish)
VIX 20.39-26.54 (bullish)
USD 105.20-107.50 (bullish)
Oil (WTI) 85.68-97.11 (bearish)
Gold 1 (bullish)
TSLA 781-939 (bearish)
Bitcoin 20,902-24,462 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
