The Gravity Gottem

“As the Stoics say repeatedly, it’s dangerous to have faith in what you do not control.”

-Ryan Holiday

I’m going to keep this short today. I’m under the weather. The data says the flu season is hitting America hard. There’s nothing I can control about that. Like the bulls who got long ahead of last week’s CPI Mania, it’s The Gravity that got me.

 

Back to the Global Macro Grind…

Welcome to another Macro Monday @Hedgeye where the only thing worse than being sick would be not having positioned for a #Quad4 December.

As a matter of measuring and mapping #process, I like to start with a weekly review of the Global Currency market:

1. US Dollar Index did nothing in a sea of Global Equity Red last week – nothingness was somethingness
2. EUR/USD was +0.4% after a hawkish ECB surprised some – it’s the most consensus net LONG position in Macro
3. Japanese Yen was -0.1% vs. USD last week and remains Bearish @Hedgeye TREND having crashed -15.7% YTD
4. Canadian Dollar was -0.4% vs. USD last week and we remain short of it in FXC terms
5. Russia’s Ruble was down a big -3.4% vs. USD last week to -6.2% in the last month and back to Bearish TREND
6. Argentina’s Peso was down another -1.7% vs. USD last week, crashing -17.1% in the last 3 months

Evidently the Global Currency market didn’t care to front-run Messi and Co’s World Cup win. Argentines needed the great news. Their currency has crashed -40% in #Quad4 vs. USD in 2022.

Ex-Turkey (TUR) which is up another +3.2% this morning to +18.7% in the last month alone (and remains a Core Long in the Hedgeye Asset Allocation Model that posts dynamically & daily to Macro Pro subscribers), Global Equities generally got #Quad4’d last week:

1. NASDAQ (and GROWTH) led USA’s major index decline at -2.7% on the week crashing to -31.6% YTD
2. US Consumer Discretionary (XLY) and Elon’s TSLA continued to crash with XLY -4.0% last week
3. Germany’s DAX finally failed hard @Hedgeye TREND resistance, closing down -3.4% last week

Outperformers (on the Long Side of your Asset Allocation) included Gold, Utilities, and long-term Treasury Bonds:

1. Gold was only down -0.6% on the week and remains Bullish on both our TRADE and TREND Signals
2. Utilities (XLU) were only down -0.5% on the week and remain Bullish on both our TRADE and TREND Signals
3. UST 10yr Yield was down 10 basis points on the week and we remain long of 7-10yr Notes via IEF

Here’s what I sent out as my Top 3 Things for this morning’s Macro Show:

Very short-term #oversold is as oversold does…

1. OVERSOLDS – US stocks were down for the 3^rd straight session with SPY down for 11 of the last 15 as consensus comes to realize that #Quad4 Recession risk is the forward looking risk with the Inflation Cycle Peak being rear-view news. That said, this is why we have the LOW end of the Risk Ranges! That’s where you buy/cover SOME for a trade in a bear market with the VIX in The Chop Bucket. China down -1.9% overnight signaled #Oversold in Shanghai too
2. RATES – big short-term move in European Rates after most European Sovereign Yields broke out back above @Hedgeye TREND Signal Levels – UK 10yr Yield leading again this morning up another +11bps to 3.43% and Germany’s 10yr up another +4bps to 2.18% (TREND breakout Level = 1.91%). UST 10yr Yield continues to look like the US economic data (slowing at a faster pace) with lower-lows and lower-highs in my Risk Range again this AM
3. GOLD – Dollar Up, Gold Up on Friday was a welcomed and proper #Quad4 Signal while rate sensitive Utes (XLU) sold off alongside US Equity Beta but all of our Precious Metals & Mining Longs were up in a sea of US Equity Beta red. We’d recently added GDXJ (Gold Juniors), SIL (Silver Miners), and SILJ (Silver Juniors) to our dynamic & daily Macro Pro Asset Allocation model, so that worked

Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets

UST 30yr Yield 3.40-3.72% (bearish)
UST 10yr Yield 3.36-3.65% (bearish)
UST 2yr Yield 4.13-4.43% (bullish)
High Yield (HYG) 73.58-75.68 (bearish)
SPX 3 (bearish)
NASDAQ 10,586-11,230 (bearish)
RUT 1 (bearish)
Tech (XLK) 125-134 (bearish)
Consumer Staples (XLP) 74.61-77.23 (bullish)
Healthcare (XLV) 135-141 (bullish)
Defense (ITA) 108-113 (bullish)
Utilities (XLU) 69.42-73.18 (bullish)                               `              
Shanghai Comp 3080-3221 (bearish)
Nikkei 27,207-28,245 (bullish)
DAX 13,887-14,401 (bearish)
VIX 20.67-25.79 (bullish)
USD 103.60-107.65 (bullish)
EUR/USD 1.023-1.068 (bearish)
USD/YEN 134.98-140.12 (bullish)
GBP/USD 1.183-1.243 (bearish)
CAD/USD 0.726-0.741 (bearish)
Oil (WTI) 69.63-77.99 (bearish)
Nat Gas 5.31-7.30 (bearish)
Gold 1 (bullish)
Copper 3.66-3.93 (neutral)
Silver 22.12-24.48 (bullish)
MSFT 237-257 (bearish)
AAPL 132-144 (bearish)
AMZN 84-92 (bearish)
META 109-123 (bearish)
GOOGL 87-95 (bearish)
NFLX 283-321 (bullish)
TSLA 145-181 (bearish)
Bitcoin 16,232-18,023 (bearish)

Best of luck out there this week,
KM 

Keith R. McCullough
Chief Executive Officer