“This place has to be show-ready 100 percent of the time.”
-Nick Saban
In a sentence, that’s Nick Saban’s #process. It’s what he said at his initial staff meeting at Alabama. He wanted that for everyone in the building. Saban: “If anyone walks into our building and the bathrooms were dirty, it would make the program look bad.” (pg 20)
How detailed, deliberate, and disciplined is your Full Investing Cycle #process? That’s not a personal challenge, it’s a question you all have to be able to answer for yourselves. I know what mine is. I also know where my edges are and where I can evolve it.
I want to check-down the #process today. For those of you who don’t know what that means, I just asked ChatGPT: “In football, checking it down refers to a quarterback’s decision to throw a short pass or one out of bounds…” I do that, every trading day.
Back to the Global Macro Grind…
Yesterday, one of my players came up to me in the middle of The Game and asked me a redundant question about the content production #process. I replied that we’ve never wasted time double-checking that. It didn’t require a check-down or a chat.
Everyone on my team knows when I don’t want to chat. It’s not because I don’t like to chat. It’s because I am executing on a part of the process that requires my detailed, deliberate, and disciplined attention.
“It was a masterclass in Saban’s attention-to-detail prowess… He was direct about how he wants things done.”
-John Talty, The Leadership Secrets of Nick Saban
Back to the other chat, here’s more from ChatGPT on checking-it-down: “It is a safer and more conservative option to maintain possession and potentially setup more manageable situations for subsequent downs.”
If checking-it-down doesn’t describe my decision-making-process during The Game, I don’t know what does!
Example #1 = Long Treasury Bonds:
A) Why go to my MAX Asset Allocations in a Fixed Income ETF when we have Macro Tourist Event Risk Day today (CPI)?
B) Why not buy-more of what’s already at the LOW-end of my Risk Ranges instead?
C) Why not take the shot down field and go to my MAX irrespective of the answers to A and B?
A: I’m only at a 2% position right now in TLT because that’s what the check-down #process told me to do.
*NOTE: TLT has been much larger than that, but the process also had me sell-SOME of it when it was green last week
Example #2 = Long Corporate Bonds:
A) Why not buy-MORE Investment Grade Defensive Credit (IIGD) yesterday if it’s already at the LOW-end of my Range?
B) Why get distracted by the difference in the Long Pass (TLT) and the easier Short Pass (IIGD)?
C) Why not just pass the damn ball to IIGD, getting that position sized up to 2/3 of my MAX?
A: I completed the pass to IIGD yesterday and now that’s a 4% Asset Allocation.
*Note: I also added to relatively new Corporate Bond positions (IGIB and PFIG)
Example #3 = Cover-SOME Tech (XLK) and Short-MORE Industrials (XLI):
A) Why not cover-SOME Tech on red yesterday? (It was down -0.8%)
B) Why not short-MORE Industrials on green yesterday? (it was wide open on green!)
C) Why are you so emotional when the ball is in your hands? They’re just tickers…
A: I shorted more XLI and JETS (Airlines) yesterday and covered-SOME IWM, QQQ, and XLK.
Depending on how experienced you are as the QB of your Full Investing Cycle portfolio, that last part C) can really make a difference. If you’re one of those intellectual types I’ve played with who can’t just block the noise and throw the ball, you’re going to struggle.
Obviously if The Game was easy, everyone would be generating alpha in bear markets instead of whining about them or telling you how “bearish” the winning Full Investing Cycle teams are.
As you can see in the 21 Long Positions in my current Macro Pro Asset Allocation Model, I have a lot of check-downs to do every game. My Long/Short Book currently has 20 Shorts, so I’m dealing with all of those as well.
I couldn’t do that without my defined, rules-based, check-down process. My only chat this morning was with ChatGPT.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.62-3.89% (bearish)
UST 10yr Yield 3.31-3.62% (bearish)
UST 2yr Yield 3.75-4.23% (bullish)
High Yield (HYG) 74.05-75.03 (bearish)
SPX 4041-4149 (bearish)
NASDAQ 11,799-12,299 (bearish)
RUT 1 (bearish)
Tech (XLK) 146-153 (bearish)
Gold Miners (GDX) 32.91-36.35 (bullish)
Utilities (XLU) 67.85-69.70 (bullish)
Staples (XLP) 75.98-77.91 (bullish)
Nikkei 28,416-29,427 (bullish)
VIX 16.13-20.85 (bullish)
USD 100.74-102.00 (neutral)
CAD/USD 0.728-0.749 (bearish)
Oil (WTI) 67.10-75.13 (bearish)
Oil (Brent) 70.71-79.14 (bearish)
Gold 1 (bullish)
Copper 3.78-3.95 (bearish)
Silver 24.75-26.39 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
