“If you’re not obsessed, you’re going to be mediocre.”
- Cameron Hanes
I like that quote, a lot. Did you short lots of MSFT, GOOGL, and QQQ yesterday? Good.
The aforementioned quote comes from an obsessed man by the name of Cameron Hanes. I’ve cited his book (Endure – How To Work Hard, Outlast, and Keep Hammering) lots in 2022.
Are you obsessed about markets? Are you constantly evolving and improving your decision making process? Good. That’s how you generate alpha and win championships across the Full Investing Cycle.
Back to the Global Macro Grind…
I know. We just had another 3-day bear market bounce that most are obsessing over. Don’t confuse their panic short-covering (and in some cases buying GOOGL calls into the print) with my obsession.
I’m obsessed with staying in it to win it across the Full Investing Cycle.
Fully loaded with yesterday’s bounce to lower-highs, I’m assuming everyone knows that the NASDAQ is still in full-send Crash Mode at -30.3% from its all-time bubble high with -8.7% of immediate-term downside.
I could end this note with that and move on with my process/day.
But I can’t. People need to know more. “Why, why, why”… “why can’t the US Dollar keep going down”, “why can’t interest rates keep going down”, why can’t everything everyone owns keep going up?
A: #Quad4
Yes, there’s an explicit relationship between the US Dollar and stocks in #Quad4. SPY has a -0.9 immediate-term INVERSE correlation with USD. Why? In a Global #Quad4 Recession, US Cash is king.
Ex-MSFT starting to guide to economic reality (they have a LONG way to go before they guide to what REVS/EPS will be using our #Quad4 Recession GDP numbers), 3 big things happened in FX in the last 48 hours:
- GBP/USD squeezed to the top-end of my Risk Range post Sunak’s PM appointment
- Japan intervened in the FX market (like they have many times) backing USD/JPY off the top-end of my range
- Chinese (state owned) Banks sold a bunch of USD to stave off new Cycle Lows in the Chinese Yuan
All 3 of those things are called Counter @Hedgeye TREND moves. They are short-term and to be faded.
Here are 3 things I was buying on red yesterday that capitalize on the bull market in the US Dollar:
- UUP Calls
- KMLM (Mount Lucas CTA Index Strategy)
- CTA (Simplify Managed Futures ETF)
Do you know how good CTA Strategies are doing vs. Consensus Stock Picker “Fundamental Long/Short” this year? Look it up.
That’s the thing about being mathematically rules based (in a bear market) instead of using something like “Valuation” as your North Star. Valuation is an opinion. Rate of Change (ROC) data for price, volume, and volatility are facts.
If you want to start throwing around some dopey 3rd grade algebra with some multiplication and tell me what MSFT and GOOGL are “worth”, using the wrong #Quad4 GDP, Revenue, and Earnings numbers, have at it. You are going to be mediocre.
If you have friends who are constantly chasing “rallies”, begging for “pivots”, etc., they have been worse than mediocre.
Stop. Breathe. Execute.
You can do this. The #Quad4 Profit Recession is just getting started.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 3.86-4.33% (bullish)
UST 2yr Yield 4.33-4.65% (bullish)
High Yield (HYG) 70.65-73.48 (bearish)
SPX 3 (bearish)
NASDAQ 10,226-11,228 (bearish)
RUT 1 (bearish)
Tech (XLK) 114-129 (bearish)
VIX 28.13-33.69 (bullish)
USD 110.42-113.93 (bullish)
USD/YEN 146.22-151.01 (bullish)
GBP/USD 1.101-1.159 (bearish)
Oil (WTI) 81.38-88.51 (bearish)
Gold 1 (bearish)
MSFT 223-251 (bearish)
GOOGL 95-105 (bearish)
TSLA 201-229 (bearish)
Bitcoin 18,471-20,775 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
