“This book is commonly referred to as The Book of Truth.”
- Tim Kennedy
In Scars and Stripes, Kennedy wasn’t referring to Nicki-leaks and his WSJ tweets. He was talking about the book a Green Beret signs when being admitted to serving and protecting at the highest level.
“We were each given our individual Yarborough knife. Each knife has a serial number and your name. You then sign a book that dates all the way back to the ‘60s, with your serial number and your name…”
They call it The Book of Truth “because of how many people claim to be Green Berets that have proven liars by this book.” You know, like how The 2022 Bond Market Truth has proven liars of everyone claiming fake Fed Pivot news…
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where the only truth in my notebooks is The ROC. The Rate of Change of the Global Economic data continues to slow into a Global #Quad4 Recession.
The @Hedgeye TREND in Global Currencies doesn’t lie – people with short-term US stock charts do:
- US Dollar Index had another Counter @Hedgeye TREND correction of -1.1% last week to +15.8% YTD
- EUR/USD had a Counter @Hedgeye TREND bounce of +1.0% and remains Bearish TRADE and TREND
- Japanese Yen had no bounce – it was FLAT vs. USD last week and has crashed -22.0% YTD
- GBP/USD had a Counter @Hedgeye TREND bounce of +2.8% last week and remains Bearish TRADE and TREND
- Canadian Dollar barely bounced +0.3% vs. USD last week and also remains Bearish TRADE and TREND
- Argentina’s Peso had NO BOUNCE, down -1.5% vs. USD last week, crashing 15.8% in the last 3 months alone
Don’t cry for me Argentina. Don’t tell me about AAPL now being 14% of the NASDAQ (7% of SPY) and everyone having to buy/chase it into their OCT month and year end (in order to show investors they didn’t own GOOGL, AMZN, or MSFT).
I don’t care about the narratives. Longer-term investors like me care about capitalizing on the Full Investing Cycle.
Despite the uniquely American US Stock market FOMO last week (and a Down Dollar), here’s what Commodities did:
- CRB Commodities Index barely moved at +0.1% on the week and remains a Global #Quad4 Recession in demand signal
- Oil (WTI) popped +3.4% last week to -4.4% in the last 3 months and remains Bearish TRADE and TREND
- Gasoline (RBOB) reflated +9.2% to +18.1% in the last month alone and is testing a TREND breakout
- Copper dropped another -1.3% last week to -22% YTD and remains Bearish TRADE and TREND
- Coffee crashed, down another -9.7% last week to -23.6% in the last month alone
So you’re saying there’s a chance (for a Fed Pivot)…
And Powell wants Gasoline prices on Main Street up another +20-30% from here? Why even pretend for a few months that you’re like Volcker, for The People, if that’s the next Wall Street trade?
If/when the Fed actually pivots (i.e. CUTS RATES), Asset Allocations like Gold won’t look like it does this morning:
A) Gold was DOWN another -0.7% last week taking its TRENDING 3-month return to -7.0%
B) Gold is DOWN (again) this morning with RATES pivoting higher and the DOLLAR UP
So what did RATES (UST Bond Yields) actually do last week that got the Fictional Fed Storytellers out in full force?
A) UST 2yr Yield was down -6 basis points last week, but is UP +7 basis points this morning
B) UST 10yr Yield was down -20 basis points last week, but is UP +5 basis points this morning
Remember the time the narrative was BUY GOOGL, MSFT, and AMZN when RATES go down? #NiceCall.
Obviously we have month-end-markup dynamics to deal with and plenty of hedge funds blowing up day to day (which perpetuates short-term Counter @Hedgeye TREND squeezes in HIGH BETA, HIGH SHORT INTEREST Factor Exposures)…
But, in terms of Single Stock news, what consensus bulls really learned last week was that #Quad4 realities in Corporate Profits (REVS and EPS SLOWING at the same time) matter a LOT more than their Fake Pivot News.
Yes, super LATE CYCLE pricing for some Industrials (XLI) in Q3 was a welcomed relief to stock prices that crashed for 10 months prior. But now those companies have to deal with #Quad4 in Q4… and #Quad4 in 1H of 2023…
As China continues to slow at a faster pace (OCT PMI just #slowed to 49.2, and Chinese stocks were down another -0.8%).
As for whoever was chasing RATE SENSITIVITY like Utilities (XLU) +6.5% last week, good luck to them if/when Bond Yields back right up towards the top-ends of my Risk Ranges.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 30yr Yield 4.01-4.45% (bullish)
UST 10yr Yield 3.89-4.33% (bullish)
UST 2yr Yield 4.30-4.66% (bullish)
High Yield (HYG) 70.96-74.70 (bearish)
SPX 3 (bearish)
NASDAQ 10,305-11,264 (bearish)
RUT 1 (bearish)
Tech (XLK) 117-130 (bearish)
Energy (XLE) 81.76-91.34 (bullish)
Shanghai Comp 2 (bearish)
VIX 25.40-33.11 (bullish)
USD 109.31-114.03 (bullish)
EUR/USD 0.969-1.006 (bearish)
USD/YEN 145.77-151.10 (bullish)
GBP/USD 1.104-1.163 (bearish)
CAD/USD 0.721-0.740 (bearish)
Oil (WTI) 81.40-89.85 (bearish)
Gold 1 (bearish)
Copper 3.27-3.54 (bearish)
MSFT 222-241 (bearish)
AAPL 138-157 (bearish)
AMZN 92-115 (bearish)
META 94-123 (bearish)
GOOGL 90-100 (bearish)
TSLA 203-233 (bearish)
Bitcoin 18,401-20,969 (bearish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
