“I believe scoring and self-improvement are what the game is all about.”
-Dave Pelz
Do you golf? If you do, those of you who risk managed your way into and out of the 1 US Growth Bubble probably remember reading Dave Pelz’s Short Game Bible (published in 1999). It’s a classic!
“Our research has shown that golfers learn faster, and better, if they learn both why and how at the same time.”
In other words, if you care about your score and self-improvement, understanding a successful process and executing on it matters more than just about anything else.
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where the #process doesn’t change; Old Wall Perma Bull narratives do. What stops #Quad4? Unless they can quantify WHEN that stops, I don’t believe them.
Let’s start with the Global Currency Market:
- USD Dollar Index finally corrected -0.8% last week but remains Bullish TREND @Hedgeye in #Quad4
- EUR/USD was down -0.4% last week with Europe’s #BankBailout and remains Bearish TREND
- Japan’s Yen was +1.7% vs. USD last week moving back to Bullish TREND vs. USD which is interesting
- GBP/USD was +0.3% last week but still remains Bearish on both our TRADE and TREND durations
- Chilean Peso was down -4.9% vs. USD last week and remains Bearish TRADE and TREND
- Hungary’s Forint was down -4.4% vs. USD last week and remains Bearish TRADE and TREND
Yep, even on a “Dollar Down week”, USD was up against Euros and Emerging Market currencies like Pesos and Forints. If those things weren’t part of your weekend ROC (Rate of Change) review, you probably don’t practice your Short Game either!
We measure and map EVERYTHING so that we don’t have to give you a simple narrative about ONE THING.
#Quad4 Crash in Commodities isn’t a narrative. It’s what happens 100% of the time that #Quad4 Demand crashes:
A) CRB Commodities Index was down another -3.9% last week, making new Cycle Lows in #Quad4
B) Oil (WTI) crashed another -13.0% last week and remains Bearish TRADE and TREND
C) Copper was down another -3.4% last week after breaking bad to Bearish TREND in prior weeks
D) Lean Hogs were down another -8.7% last week and remain Bearish TRADE and TREND as well
Do you like bacon? If you do, that’s good. Prices are finally coming down for eggs too!
You know it’s getting bearish for the Bank Stocks when Bacon & Eggs are coming down as fast in price. If you thought life was getting bad for certain bankers, imagine being a Macro Unaware Energy Bull!
A) Energy Stocks (XLE) were even worse than Financials, losing another -6.9% last week
B) Mainline Financials (XLF) were pretty bad though, dropping another -5.9% last week
But, no worries, all of your friends who were long “cheap” Energy AND “cheap” Bank Stocks have been selling all of those on red and replacing them with under-the-radar contrarian “plays” like AAPL and MSFT!
While I’m not sure how they’ll thread the needle on Global Deposits Crisis and MAGMA Stocks seeing #acccelerating revenues into the throat of down -2% US GDP, who really cares (until these companies have to report #Quad4 reality)?
Last week was a tough one for the “European Banks Are In Great Shape” narrative too:
- Germany’s DAX was down -4.3% on the week, breaking bad back to Bearish @Hedgeye TREND
- Italy’s MIB Index was down more than that at -6.6% and is also back to Bearish TRADE and TREND
- Austria’s Stock market led European Losers at -9.3% last week and remains Bearish TREND
Ex-China, Emerging Markets wasn’t much better:
- Chinese Stocks (Shanghai Comp Index) were actually up +0.6% last week in #Quad1
- Egyptian Stocks crashed another -10.6% last week and remain Bearish TREND @Hedgeye
- Qatar’s Stock market crash continued at -7.7% last week too
Why do we care about Egypt (EGPT) and Qatar (QAT)? Because we have a good Short Game. We’re short of both.
When you have a good Diversified Global Macro Short Game, you don’t have to stare at some ridiculously oversized “hedge” in QQQ and wonder when uniquely American FOMO is going to end (again) for MAGMA.
Our Go Anywhere Long/Short Game was pretty good too last week with:
A) Long Gold up +6.5% on the week taking it’s Full Investing Cycle (3-month) Return to +11.1%
B) Short High Yield (HYG) working again with HY OAS Spreads widening another +59 basis points
As for US Treasury Bond Yields, what to do after a -77 basis point weekly drop in the UST 2yr Yield? Since my Risk Range on 2s is at a record +175 basis points wide (3.47-5.22%) this morning, I’ll go with recommending prayer again.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.54-3.96% (bearish)
UST 10yr Yield 3.26-4.08% (bearish)
UST 2yr Yield 3.47-5.22% (bearish)
High Yield (HYG) 72.32-74.23 (bearish)
SPX 3 (bearish)
NASDAQ 11,034-11,830 (bearish)
RUT 1 (bearish)
Tech (XLK) 133-145 (bearish)
Shanghai Comp 3 (bullish)
Nikkei 26,545-27,799 (bearish)
DAX 14,503-15,341 (bearish)
VIX 21.57-29.50 (bullish)
USD 102.75-106.29 (bullish)
EUR/USD 1.048-1.074 (bearish)
USD/YEN 130.01-135.69 (bearish)
GBP/USD 1.176-1.220 (bearish)
Oil (WTI) 64.12-72.95 (bearish)
Nat Gas 2.28-2.82 (bearish)
Gold 1 (bullish)
Copper 3.80-4.02 (bearish)
Silver 19.76-23.11 (bullish)
MSFT 238-281 (bearish)
AAPL 146-157 (neutral)
META 178-209 (bullish)
GOOGL 86-102 (bearish)
Bitcoin 18,461-28,607 (bearish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
