“I haven’t heard you tell me I’m the man.”
-Quarterback (to Nick Saban)
Sort of like when I hear someone opine about AI (and not mention The Cycle), I laughed out loud when I read the aforementioned excerpt in The Leadership Secrets of Nick Saban.
In response to the hot-shot rookie prospect’s statement, Saban “looked the recruit right in his eyes and said ‘I’ll give you a chance to prove to me you’re the man, but I haven’t seen you take a damn snap in an SEC game yet. How do you expect me to tell you you’re the man?’.” (pg 35)
Given Jensen’s NVDA is signaling $423/share now (in my daily Risk Range product, which continues to signal Bullish @Hedgeye TREND), I’m assuming everyone is assuming this guy is The Man! It’ll be fun to see him take a few more quarterly conference call snaps.
Back to the Global Macro Grind…
Welcome to the start of a new week where, ex-NVDA-MSFT-XLK, etc., #Quad4 is proving itself out almost everywhere.
Let’s start with the always critical Global Currency market week-over-week signals:
- US Dollar Index was up another +1.0% last week (up for the 3rd straight week) and is back to Bullish TRADE and TREND
- EUR/USD was down -0.8% last week to -3.1% in the last month and is back to Bearish TRADE and TREND
- Yen was down another -1.4% vs. USD last week to -5.1% in the last month and is Bearish TRADE and TREND
- CAD/USD was down -1.0% last week and remains Bearish TRADE and TREND
- Swedish Krone was -2.3% vs. USD last week to -4.4% in the last month and remains Bearish TRADE and TREND
- Norwegian Krone was -1.9% vs. USD last week to -4.1% in the last month and remains Bearish TRADE and TREND
‘But, but… KM, where do you see #Quad4?”
Realizing it’s hard to see “AI” in Krones, I get it. What chart chaser who loved “dot com” in 2000 or “blockchain” in 2021 at BTC $68k, knows the #Quad4 back-test on US Dollar breakouts? (hint: the big ones happen in #Quad4)
How about the Commodities market? A: obvious #Quad4 Demand Slowing:
- CRB Commodities Index was down another -0.6% last week and remains Bearish TRADE and TREND
- Oil (WTI) had a bear market bounce of +1.4% last week (but is -2% this morning) and remains Bearish TREND
- Dr. Copper was down another -1.3% last week to -4.6% in the last month alone and remains Bearish TREND
- Aluminum was down another -2.1% last week to -3.9% in the last month and remains Bearish TREND
- Lean Hogs dropped -9.9% last week alone to -17.2% in the last month and remains Bearish TREND
Evidently, there is no “AI” in Lean Hogs. The price of Coal just dropped -12% in a day. Nothing to see here into month-end.
How about The Yield Curve? A: nasty #Quad4 recession signal:
A) UST 10yr minus 2yr Yield re-inverted -17 basis points last week to -76bps
B) UST 10s minus 2s is re-inverting another -2 basis points to -78bps this morning
Yep, that’s another bone-chilling 2-month low of -78bps on The Curve for whoever bought a steepener (and shorted USD!) heading into the #DebtDeal! At least our Rate Sensitive buys (on red) last week should start to recover.
Rate Sensitive Buys from last week (on red):
A) Gold was -1.6% so I bought more
B) Staples (XLP) were down -3.3% so I bought more
Those are just two examples of Buying Opportunities that presented themselves via the #DebtCeiling debate (where consensus opted to take the Net Short position in the UST 10yr Bond to a record -826,918 net short contracts!).
You could have bought pretty much anything from Commodities to local (US) and Global Equities last week btw:
- Chinese Stocks (Shanghai Comp) were down another -2.2% last week = #Quad4
- Italian Stocks (MIB Index) were down -2.9% last week = #Quad4 Recession in Europe
- Canadian Stocks (TSX) were down -2.8% last week = #Quad4 Recession there too
I guess the only country that is going to get AI is America, eh? That’s so cool. Isn’t it even cooler that Japanese Stocks (+8.8% in the last month) don’t need AI to go up?
With 8 of the 11 main US Equity Sectors down (in most cases down hard) for both the month of May and #Quad4 in Q2-to-date, it’s going to be very interesting to see what happens to US #BubbleCap Tech in June…
If they just keep going up as the economy continues to slow into #Quad4, Jensen will indeed prove that he is The Man!
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.81-4.01% (neutral)
UST 10yr Yield 3.41-3.81% (neutral)
UST 2yr Yield 3.96-4.59% (bullish)
High Yield (HYG) 73.29-74.61 (bearish)
SPX 4077-4228 (bearish)
NASDAQ 12,273-12,998 (bearish)
RUT 1 (bearish)
Tech (XLK) 154-167 (bullish)
Gold Miners (GDX) 29.81-33.97 (bullish)
Utilities (XLU) 64.27-67.66 (bullish)
Staples (XLP) 72.50-77.32 (bullish)
Shanghai Comp 3162-3286 (bearish)
Nikkei 30,072-31,437 (bullish)
DAX 15,704-16,298 (neutral)
VIX 16.34-20.85 (bullish)
USD 102.02-104.69 (bullish)
EUR/USD 1.068-1.091 (bearish)
USD/YEN 136.43-141.26 (bullish)
GBP/USD 1.228-1.251 (neutral)
CAD/USD 0.731-0.744 (bearish)
Oil (WTI) 70.08-74.31 (bearish)
Oil (Brent) 74.17-78.65 (bearish)
Nat Gas 2.27-2.68 (bearish)
Gold 1 (bullish)
Copper 3.53-3.78 (bearish)
Silver 22.91-24.55 (bullish)
MSFT 308-335 (bullish)
AAPL 171-177 (bullish)
AMZN 111-122 (bearish)
META 238-265 (bullish)
GOOGL 117-127 (bullish)
TSLA 164-199 (bearish)
NVDA 328-423 (bullish)
Bitcoin 26,033-27,994 (bearish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
