“The heroes of all time have gone before us; the labyrinth is thoroughly known.”
-Joseph Campbell
I’m old enough to remember when both Bitcoin and NASDAQ crashed to their Cycle Lows (last Wednesday). As Joseph Campbell reminds you in The Hero With A Thousand Faces, history is old enough to remember all of our repeated human mistakes.
Since The Cycle peaked in #Quad2 at this time last year, instead of “following” fraudsters, scammers, and storytellers: “We have only to follow the hero path… where we had thought to be alone, we shall be with all the world.” (pg 18)
For that is The Cycle. Unlike weaving fictions and panicked Macro Tourist headlines, it doesn’t “pivot.” It cycles.
Back to the Global Macro Grind…
Welcome to what should be an interesting Macro Monday @Hedgeye. With the epicenter of The Mother of All Bubbles (Crypto) imploding to new Cycle Lows this weekend, we will have the discipline to stay with the TRENDING realities of The Cycle.
Let’s start with levels not seen in the Currency Market since the last time consensus chased “STAHKS” and sold US Dollars (I’m old enough to remember AUG of 2022 too!):
- US Dollar Index got smoked for a -4.1% weekly correction to +1.1% in the last 3-months and +11.1% YTD
- EUR/USD had a big Counter @Hedgeye TREND bounce of +3.9% last week to Bullish TRADE, but Bearish TREND
- Japanese Yen had a bigger bear market bounce of +5.6% last week to Bullish TRADE, but Bearish TREND
- GBP/USD had a big Counter @Hedgeye TREND bounce of +4.0% last week but remains Bearish TRADE and TREND
- Argentina’s Peso had NO bounce, down another -1.6% last week, crashing -16.2% in the last 3-months = TREND
- Brazil’s Real got smoked for a -5.0% loss vs. USD last week and also remains Bearish TRADE and TREND
Especially if all they do is trade Shiba Inu Coins and yolo AAPL calls, I doubt those peeps saw what happened in both Brazilian Currency and Equity last week. The narrative was buy both. The Cycle sold both (Brazil’s stock market was also -5.0% last week).
But, whatever you do, do not look at everything in Global Macro. What you’d be looking at is not what uniquely American FOMO (stock market) chasers need to see. What they were begging for pre Phase II of The Bear Market (in AUG) is the same as today.
If/when the Fed “pivots”, what does that mean?
A) No more rate hikes after FEB… or
B) Then immediate RATE CUTS when we hit the lows of the #Quad4 Recession? (i.e. in Q2 of 2023)
While some #Quad4 Crashing Commodities (like Copper +6.2%) had big bear market bounces last week:
- The CRB Commodities Index had no FOMO last week (it was down -0.6%)
- Oil (WTI) had no resurgence in Global Demand FOMO either (it was -3.9% on the week)
- Corn was down -3.5% last week breaking @Hedgeye TRADE and TREND support
And it wasn’t just Brazil’s stock market that didn’t look anything like the NASDAQ’s big bear market bounce off the lows:
A) Chinese Stocks (Shanghai Comp) were only +0.5% on the week to -5.9% in the last 3 months
B) UK’s FTSE was down -0.2% on the week to -2.0% in the last 3 months (i.e. TREND)
“But, but… Bond Yields finally went down (for 2 days)… and on Friday (when the bond market was closed)…”:
A) Yield Curve was -2 basis points on 10s minus 2s last week to the lowest level since the 1981 recession (-52bps)
B) High Yield OAS Spread was +6 basis points WIDER last week to 4.68% and +60bps in the last 3 months (TREND)
So, assuming you didn’t lose all your moneys at FTX, Crypto.com, etc., what are you going to do this morning if you are still long any (or many) of these #BubbleCaps like TSLA, MSFT, META, etc.?
There is -16% and -28% of immediate-term downside to the low-end of my MSFT and META Risk Ranges this morning. Nothing to see there or in Tech’s (XLK) ultra-complacent and capitulatory -37% implied volatility DISCOUNT (vs. 30-day realized vol)!
The Cycle has thousands of faces. If the SEC’s Gensler is actually doing his job this week, the ones you’re about to see prosecuted in Crypto are going to make the faces of former Enron and Tyco executives look like angels.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 30yr Yield 3.99-4.42% (bullish)
UST 10yr Yield 3.81-4.32% (bullish)
UST 2yr Yield 4.32-4.83% (bullish)
High Yield (HYG) 71.51-74.75 (bearish)
SPX 3 (bearish)
NASDAQ 10,029-11,359 (bearish)
RUT 1 (bearish)
Tech (XLK) 115-134 (bearish)
Energy (XLE) 87.11-94.50 (bullish)
Consumer Staples (XLP) 70.51-74.12 (bullish)
Healthcare (XLV) 128-136 (bullish) `
Shanghai Comp 2 (bearish)
VIX 22.11-28.12 (bullish)
USD 105.52-113.83 (bullish)
EUR/USD 0.965-1.036 (bearish)
USD/YEN 138.51-151.97 (bullish)
Oil (WTI) 84.73-93.20 (bearish)
Gold 1 (bullish)
Copper 3.32-3.94 (bearish)
MSFT 208-248 (bearish)
META 81-115 (bearish)
Bitcoin 16,113-19,314 (bearish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
