“Imperturbable wisdom is worth everything.”
-Democritus
Especially when preserving and protecting your hard earned capital when headed into a recession, experience is everything. Don’t confuse that with who needs/wants to sound like the smartest guy in the room.
I personally knew nothing about Silicon Valley Bank. All I knew was that a #Quad4 US Profit Recession = Credit Event. Why else would we have made that Macro Theme #1 back in JAN of 2023 after going bearish in JAN of 2022?
As Ryan Holiday goes on to explain in Stillness Is The Key, “unlike traditionally wise people who knew many things, and unlike pretentious people who claimed to know many things, Socrates was intellectually humble.” (pg 63)
Back to the Global Macro Grind…
I am not Socrates. I am Mucker. And I am grateful for both my family and firm. Without their strength and support, I wouldn’t be able to execute on my #process. I wouldn’t have been able to fade the noise of people chasing (again) in JAN of 2023.
Now we get into the not-so-fun-part of The Cycle where Credit Event Risk Rising happens at a faster pace:
A) US Sovereign CDS (Credit Default Risk) just ripped to +41 basis points on 5yr bonds
B) For Cycle Context, see our Chart of The Day: that’s not only > Pandemic Levels but a 10-year high
And you thought I was going to break-down Peter Thiel telling his fund investors to “get out” of SIVB on a 14-month lag to Hedgeye telling you this is how #Quad4 ends?
Q: If none of these people understood when The Cycle peaked, why do you trust they know when it troughs?
Can you get the “pretentious people” of Ye Olde Wall to explain, specifically, how all of Private Equity, Venture Capital, Angel Unicorn Dreams, etc. are going to take their real marks on their funds?
This is how The Cycle plays out into a broadening US Profit Recession that’s littered with leverage. It ends in non-linearity.
Ironically enough, today is the anniversary of the Dot.com Bubble peaking in March of 2000 at 5048. That’s only down -55% (from here) to get back to the prior bubble’s high. Nothing to see here…
Unlike “traditionally wise people” who will use a linear “valuation” model with an “average multiple” to tell you when The #Quad4 Crash of 2022-2023 “bottoms”, I have no idea.
All I know is what I know about A) Timing Cycles and B) what’s in my Full Investing Cycle math today:
- NASDAQ’s Crash from The Mother of All Bubble peaks is currently at -29.4%
- It has immediate-term downside in my Risk Range towards 11,178
The low-end of my range implies that The QQQ Crash could be greater than -30% by the weekend and no one should be surprised. No one should be surprised if/when we get another bear market bounce… and …
No one will be surprised when I send you a Real-Time Alert that I am selling the next bounce.
It’s not just NASDAQ that’s punishing a certain “type” of new age “investor” this morning. Crypto is getting clocked. If you thought being long QQQ was bad, try being down -71% from the Bitcoin Bubble Peak.
You know that you’d have to be up +245% to get back to break-even (if you lost -71%), right?
And while they’re in the midst of indicting Bankman Fraud and these lying losers at Silvergate Capital (SI taking a visit to Dr. Zero), they haven’t even regulated this bloody “asset class” yet!
From SPAC pump and dumps, to wash sale coin trading, to illiquid Real Estate schemes like B-REIT and S-REIT, to VC and ya you and me “Alts”, it’s all coming down now, at the same time.
And, with back to back #Quad4’s in the Hedgeye Nowcast Model for Q1 and Q2 of 2023, it’s all coming down at the particular point in Cycle Time that hurts the most.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 3.82-4.09% (bullish)
UST 2yr Yield 4.72-5.07% (bullish)
High Yield (HYG) 72.71-74.85 (bearish)
SPX 3 (bearish)
NASDAQ 11,178-11,699 (bearish)
RUT 13 (bearish)
Tech (XLK) 133-141 (bearish)
VIX 18.52-23.51 (bullish)
USD 104.12-105.98 (bullish)
Oil (WTI) 74.06-79.41 (bearish)
Gold 1 (bullish)
Copper 3.91-4.15 (neutral)
TSLA 167-199 (bearish)
Bitcoin 19,511-22,910 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
