“Your environment will become you.”
–Someone
It's Hedgeye Live! The conference started yesterday and goes on all day today and tomorrow. Yesterday we had a cocktail party with all the conference guests and everyone on the Hedgeye team. I don’t do conferences, so I don’t know what others are like (is this where I ask Michael Blum to send me to Italy for a conference?). At this one everyone can walk up to anyone. It's the ultimate networking event with no barriers.
What’s great about that is you get to see exactly the type of people we send research to every single day. I saw a bunch of positive, hard-working people who come from all walks of life and backgrounds trying to make a better future. If you couldn't make this year's, first off, welcome to the Hedgeye family and see you next year at the conference!
Today at 11am there is a free broadcast for everyone of Hugh Hendry. Then after that, from 1:00pm to 5:30pm we have MACROCOSM, featuring 7 discussions led by Keith McCullough with Danielle DiMartino Booth, Marc Cohodes, Mike Green, Mike Taylor, Neil Howe, Nancy Davis, Murray Stahl and Brendan Ahern.
(See the full Macrocosm schedule here. For subscribers not able to attend, the live stream of Macrocosm is available to Macro Pro subscribers on HedgeyeTV. If you're interested in Macro Pro upgrade options, email .)
Before I get to the market, a quick note. It's been a continuous grind the last few days, so bear with me, I’m going to keep this one short, sweet and process datapoint heavy. Here we go.
Back to the Global Macro Grind…
Well, that risk happened all at once huh?
This week has been very much Quad 4 but don’t be lazy. Continue to move that inventory around and find the next play.
Keith told you what he thinks on the Fed meeting and the path forward in yesterday’s Early Look. Last night the focus was on Apple. I will let our analyst team tell me on "The Call" what they think about the report. But in terms of the Risk Range, Apple was in the middle of the Risk Range going into the print and post-print is barely getting to the top end of the range. So, I’m going to read and react because Apple’s print doesn’t change… the cycle. What it might change is the Macro Tourist's giving me yet another shot on the short side of U.S. equity beta as they continue to ignore the cycle.
Think about where we are in the cycle: The Fed just raised rates, so if you are looking for some kind of relief for your banks, you're going to have to look somewhere else. As you can see from the Chart of the Day, the market believes that the Fed will hold rates flat for the next meeting then has a 50% chance of holding it flat in July. We will see.
On top of that, we @Hedgeye have Q2 being the worst GDP quarter of the cycle yet.
Then on top of that we have M2 YoY hitting all time lows in the US and a continued decline to all-time lows around the world. Pull up a chart of M2 YoY for: Eurozone $IEV, Sweden $EWD, Colombia $GXG, Switzerland $EWL, Italy $EWI, and Canada $EWC. If you think that is bad, then pull up those countries’ central bank balance sheets. Follow the money and you will find the true answer. The money is telling me that it is not going into the financial system.
Other economic data that recently came out:
- Norway $NORW and Malaysia $EWM continue to raise interest rates
- China $FXI Caixin Manufacturing PMI just came in at a contractionary 49.5
- Hong Kong $EWH Retail Sales just hit an all time high, although the signals are mixed in Asia right now. So, I’m going to stick to the alpha being generated by Keith’s long only book via Macro Pro
- On CDS we had cycle highs in: $WFC and $AON (don’t chase on the short side when you see this)
Looking at the Risk Ranges:
- Top end of the risk range: VIX, $GDX, Japan, Silver $SLV, Gold $GLD, GBPUSD $FXB
- Low end of the risk range: Russell $IWM, SPX $SPY, Dax $EWG, Nat Gas $UNG, WTI $USO, Copper $CPER, High Yield Corp $HYG
- Things that I want to ask Keith about the next time I’m on The Macro Show are Biotech $XBI, Cannabis $MSOS
- Both were the largest movers to the upside yesterday, although when something has been bid down as much as these have, they have extremely wide risk ranges (so maybe that's the answer)
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.59-3.84% (bearish)
UST 10yr Yield 3.29-3.58% (bearish)
UST 2yr Yield 3.74-4.25% (bullish)
High Yield (HYG) 74.15-75.10 (bearish)
SPX 4027-4158 (bearish)
NASDAQ 11,735-12,197 (bearish)
RUT 1 (bearish)
Tech (XLK) 142-151 (bearish)
Gold Miners (GDX) 32.65-35.99 (bullish)
Utilities (XLU) 67.51-70.32 (bullish)
Nikkei 28,218-29,206 (bullish)
VIX 16.67-21.70 (bullish)
USD 100.73-101.98 (neutral)
EUR/USD 1.095-1.109 (neutral)
USD/YEN 132.25-137.66 (bullish)
CAD/USD 0.729-0.742 (bearish)
Oil (WTI) 67.01-75.63 (bearish)
Oil (Brent) 70.62-79.80 (bearish)
Nat Gas 2.01-2.51 (bearish)
Gold 1 (bullish)
Copper 3.79-3.96 (bearish)
Silver 24.63-26.46 (bullish)
AAPL 160-171 (bullish)
Bitcoin 26,990-30,025 (bearish)
Ryan Ricci
