“A cadet will not lie, cheat, steal, or tolerate those who do.”
-West Point Honor Code
Yesterday we held the annual Hedgeye “company meeting” at Chelsea Piers in Stamford, CT. We’ve been doing these for well over a decade now but this one was different in more ways than one.
In the beginning (15 years ago), the meeting was daily. How do we build a real business built on real principles? How do we show the world what real, no-conflict-of-interest, research is? How do we show our principles of Transparency, Accountability, and Trust?
Fifteen years later, we’ve built a successful and growing business that not only takes share from the Old Wall’s conflicts of interest every day, but has now entered a far larger arena of public distrust. Make no mistake, we are on a mission. That mission is truth. We will not stand down.
Back to the Global Macro Grind…
Now that everyone who was begging and hoping for a “dovish pivot” from Powell is out of the way, it’s time for serious, longer-term, Full Cycle Investors to risk manage the Fed not only tightening into a #Quad4 Recession, but a potential Regime Shift in Policy.
Here are my Top 3 Things that I will review on The Macro Show:
Powell pivoted (again) yesterday – he pivoted to more hawkish!
- UST 2YR – short-end of The Curve = truth on Powell’s Policy. US Equity CPI FOMO Futures = fake news. UST 2yr Yield is +5bps off the low-end of my Risk Range and continue to signal not only Bullish @Hedgeye TREND (bearish for short-term debt), but a REGIME SHIFT in Fed Policy. He explicitly said “NO RATE CUTS” in 2023 and that he has “SUBSTANTIALLY MORE” work to do on inflation
- USD – I had more panicky “why, why, why” questions on why USD was down yesterday than I’ve EVER had, so you either stopped asking why and executed or you did not. Yesterday was a glaringly obvious buying opportunity in the #1 Asset Allocation you should be long of today… and for the rest of the Fed tightening into a #Quad4 Recession (USD +0.7-1.1% vs. EUR, GBP, and Yen this morn)
- VIX – I wrote about this in yesterday’s Real-Time (Coaching) Alerts but, once again, there’s an epic bubble in short-term yolo CALL buying around these CPI Mania days = $37 BILLION of delta-adjusted net to Calls on the 4000 SPX line that expire tomorrow (in context $2-4B would be a LOT), so watch out below when those expire and the Corporate Buyback window shuts next week #Blackout
I’ll leave it at that. Alongside my teammates, I have a war on liars, cheaters, and frauds to fight, and a company and #community to build.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.39-3.77% (bearish)
UST 10yr Yield 3.39-3.69% (bearish)
UST 2yr Yield 4.17-4.46% (bullish)
High Yield (HYG) 73.81-75.87 (bearish)
SPX 3 (bearish)
NASDAQ 10,751-11,404 (bearish)
RUT 1 (bearish)
Tech (XLK) 126-136 (bearish)
Consumer Staples (XLP) 75.22-77.32 (bullish)
Healthcare (XLV) 136-141 (bullish)
Defense (ITA) 109-114 (bullish)
Utilities (XLU) 69.57-73.16 (bullish)
Shanghai Comp 3124-3229 (neutral)
Nikkei 27,503-28,205 (bullish)
DAX 14,112-14,566 (bearish)
VIX 19.06-25.24 (bullish)
USD 103.52-107.80 (bullish)
EUR/USD 1.021-1.067 (bearish)
USD/YEN 134.37-140.47 (bullish)
GBP/USD 1.179-1.243 (bearish)
CAD/USD 0.727-0.745 (bearish)
Oil (WTI) 68.70-80.23 (bearish)
Nat Gas 5.25-7.25 (neutral)
Gold 1 (bullish)
Copper 3.63-3.92 (neutral)
Silver 21.87-24.50 (bullish)
MSFT 238-259 (bearish)
AAPL 138-147 (bearish)
AMZN 84-94 (bearish)
META 107-124 (bearish)
GOOGL 89-98 (bearish)
NFLX 298-326 (bullish)
TSLA 151-179 (bearish)
Bitcoin 16,206-18,060 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
