“Quite a lot of the time, truth never even shows up to the fight.”
-Tom Phillips
If you want a good #behavioral read on information vacuums, feedback loops, and the general “origin of the specious”, I recommend Truth: A Brief History of Total Bullshxt, by Tom Phillips.
“This all ties to a cognitive bias known as anchoring: our brain’s tendency to latch onto the first piece of information we get about any subject and give it far more weight than anything else.” Example: “AI”…
“When there isn’t good information, crappy information will always flood in to fill the void… all of us have to rely on others for information… but it does come with some downsides. And one major downside is the bullshxt feedback loop.” (pg 33)
Back to the Global Macro Grind…
The latest Old Wall Media narrative is “if you missed NVDA and MSFT, you have to buy all these AI plays with smaller caps.” Cool. That gave us the following Bear Basket Squeezes yesterday (using the Goldman Baskets):
- Profitless Tech basket squeezed +4.7% on the day
- Liquid Most Short basket squeezed +4.3% on the day
- Most Rolling Short basket squeezed +3.8% on the day
What do all 3 of those Bear Baskets have in common? Inexperienced Bears (certain Hedge Funds) who are short tam-tam multiples and/or profitless companies cover these baskets on up days (after selling them on down days)…
And “Retail Investors” chase them all the while, if only because they’re bag-holding their losses from last year.
What’s most interesting to me is the relationship between panic-stricken (short covering) hedgies and the “Retail Investors.” Some of them are short the bubbles – others just want their bubbles back!
Let’s do NVDA. It just moved to the 5th largest #BubbleCap you can buy for your friends and fam today:
A) NVDA’s initial #BubbleCap peak (on “blockchain”, not “AI”) was $334/share at the #Quad2 Cycle Peak NOV 2021
B) NVDA’s initial #Quad4 Crash was -66% from that $334 price in NOV 2021 to $112/share in OCT 2022
And now, wait on it… it’s all the way back up to a big lower-all-time high of $311/share heading into their having to report reality tomorrow after the close. At whatever times revs and 69x forward earnings, what could possibly go wrong?
My NVDA Risk Range (published daily in my Risk Range product for behavioral observations) = $271-$322, so:
A) There’s -13% of immediate-term downside in the Risk Range from yesterday’s close …
B) There’s +3% of immediate-term upside in the Risk Range if Jensen says “AI” > 143x on the call
GOOGL set that record of 143x at their recent analyst day. The market gave them $56B in new #BubbleCap for that.
Like AAPL though, isn’t it interesting that the TOP-end of my published Risk Range for NVDA is below the all-time closing high of $326? (AAPL’s all-time closing high is $179 and the top-end of today’s Risk Range = $176).
So, with both the Global #Quad4 Industrial Recession data slowing alongside the US Consumption data (again) this morning, you’re saying there’s a chance!
A: Of course there is. If this wasn’t #MOAB (The Mother of All Bubbles), there wouldn’t be.
There wouldn’t have been > 173,000 TSLA weekly $190 Call Options bought yesterday either. And, yes, when we look back on all of these bubbles popping, we’ll see how bubbly it all was.
Or is “AI” bigger than blockchain was? Tell me a story!
As opposed to the frauds and fictions of BTC $68k, I’ll tell you a quick story that’s now an empirical fact:
A) Eurozone Manufacturing PMI just #slowed to 44.6 in May (that’s the lowest reading since May of 2020)
B) Both Dr. Copper and Wheat are -1.6% this morning and crashing to new #Quad4 Cycle Lows
Yep. Boring. I get it. The ROC (rate of change) truth about The Cycle is far less exciting than someone’s AI bullshxt.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.75-4.01% (neutral)
UST 10yr Yield 3.32-3.74% (neutral)
UST 2yr Yield 3.84-4.40% (bullish)
High Yield (HYG) 73.68-74.95 (bearish)
SPX 4068-4209 (bearish)
NASDAQ 12,130-12,760 (bearish)
RUT 1 (bearish)
Tech (XLK) 149-159 (bearish)
Staples (XLP) 74.65-77.54 (bullish)
Shanghai Comp 3 (bearish)
Nikkei 29,218-31,345 (bullish)
VIX 16.15-20.23 (bullish)
USD 101.29-103.82 (bullish)
EUR/USD 1.073-1.097 (bearish)
USD/YEN 134.65-139.80 (bullish)
Oil (WTI) 69.65-73.45 (bearish)
Gold 1 (bullish)
Copper 3.56-3.83 (bearish)
AAPL 169-176 (bullish)
NVDA 271-322 (bullish)
Bitcoin 25,906-28,154 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
