“This is a criminal operation on a massive scale.”
-Marc Cohodes
Happy Thanksgiving!
It was just on 11/8 that FTX completely collapsed, just about two weeks ago. I’ve said it on the macro show but this has me fired up.
The reason being I have a good amount of friends that have lost their savings due to this and what have they said to me about it?
They all say basically the same thing, "All the money I put in I was ready to lose all of it. This is just investing."
Which absolutely kills me inside because:
- That’s just not true, you don’t have to lose money, we risk manage it every day.
- When everyone has the same response it is because they are all watching one thing, the same media.
If you have 5 minutes watch these two videos here and here to see just how scripted the media is.
Before you say, "Why didn’t you warn them." I did. But when you have a crowd of people saying things like HODL, irresponsibly long, or it’s the only hope for the next generation, the people who don’t have money to lose, lose money.
I don’t know how deep this whole FTX situation goes but what I do know is the media has failed these people.
So don’t forget FTX and continue to remember that the first bankruptcy is never the last.
Back to the Global Macro Grind…
Here is your current risk range setup in terms of upside : downside (using yesterdays ranges): 10yr yield 13% : 2%, HYG 0% : 5%, SPX 0% : 8%, Vix 27% : 0%, USD 5.1% : 0.5%, Meta 5.1% : 15%, Bitcoin 7% : 10%.
There is a lot of downside to this current set up although we have continued to see consolidation in risk ranges which lowers the probability of the market crashing to new lows today.
Upcoming US events: 11/29 Consumer Confidence, 11/30 GDP, 11/30 month end, 11/30 Powell speaks at Brookings, 12/1 PCE, 12/2 Nonfarm payrolls, and 12/14 Fed meeting.
On the most recent "Weekly Notebook Review" there were a lot of questions about what can make this market go back down to the bottom of the risk range. Anything, it’s the top end of the risk range in a bearish trend.
The chart of the day summarizes #FOBS (Fed Operation Break Stuff). It is showing the expected number of rate hikes/cuts implied within the market. Globally, rate hikes are not expected to end until about March/May of next year. Even more importantly is that rate cuts are not expected in 2023. Meaning when Quad 4 gets even worse there will continue to be tight money across the world.
On the world stage we had a lot of negative data:
- Sweden raised rates by 75 bps and forecasted to another hike in February along with allowing its security holdings to decrease in line with maturities
- South Africa raised rates by 75 bps, they cut GDP expectations and raised inflation expectations.
- South Africa is also currently experiencing rolling blackouts
- Denmark retail sales come in at -10.3% YoY for October. This is the lowest since March and 6th month of negative retail sales.
- Sweden and Spain PPI decelerated from cycle highs although remain at all time highs
- France and German consumer confidence have accelerated although off all time lows
- Turkey did cut rates again by 150 bps. They forecasted that this was the end of their rate cutting cycle. Inflation in Turkey is +85% YoY and has a lira that is around its all time low.
- The next countries to raise rates are Australia 12/6, Canada 12/7, and India 12/7
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 30yr Yield 3.71-4.19% (bullish)
UST 10yr Yield 3.63-4.17% (bullish)
UST 2yr Yield 4.30-4.66% (bullish)
High Yield (HYG) 72.21-75.28 (bearish)
SPX 3 (bearish)
NASDAQ 10,730-11,411 (bearish)
RUT 1 (bearish)
Tech (XLK) 124-135 (bearish)
Energy (XLE) 88.95-94.90 (bullish)
Consumer Staples (XLP) 72.25-76.84 (bullish)
Healthcare (XLV) 132-137 (bullish) `
Shanghai Comp 3026-3148 (bearish)
Nikkei 27,491-28,392 (bearish)
DAX 13,460-14,594 (bearish)
VIX 20.06-26.21 (bullish)
USD 105.50-111.17 (bullish)
EUR/USD 1.001-1.044 (bearish)
USD/YEN 137.80-144.78 (bullish)
GBP/USD 1.132-1.213 (bearish)
CAD/USD 0.731-0.757 (bearish)
Oil (WTI) 75.23-85.00 (bearish)
Nat Gas 5.31-7.90 (bullish)
Gold 1 (bullish)
Copper 3.46-3.95 (bearish)
MSFT 225-248 (bearish)
AAPL 140-153 (bearish)
AMZN 88-100 (bearish)
META 99-118 (bearish)
GOOGL 91-100 (bearish)
NFLX 273-313 (bullish)
TSLA 163-199 (bearish)
Bitcoin 15,113-17,321 (bearish)
Ryan Ricci
Macro Analyst
