“Everyday you’re credited with 86,400 seconds.”
-John Wooden
What did you miss last week? What will you miss today? Do you wake up with relentless FOMO? Or do you execute on your Full Investing Cycle life’s path, irrespective of other people’s wants and needs to “make back” what they lost from the NOV 21’ peak?
In Coach Wooden One-on-One, Wooden cites Ephesians 5:1.5-1.6: “So be careful how you live, not as fools but as those who are wise.” And I quite liked being reminded of being disciplined that way.
Wooden went on to write: “Time lost is time lost. It’s gone forever. Some people tell themselves they will work twice as hard tomorrow for what they didn’t do today. Catching up leaves them no room for them to do their best tomorrow.”
Back to the Global Macro Grind…
Welcome to the start of another market week. The best I can do is measure and map The Cycle within the context of our longer-term Full Investing Cycle #process. We’ve been bearish on both US and Global Growth #Slowing for going on 19 months.
As always let’s review what the Global Currency market is signaling about that reported (economic) reality:
- US Dollar Index finally corrected -1.3% last week, presenting us with the Buying Opportunity we were waiting for
- EUR/USD had a Counter @Hedgeye TREND bounce of +1.6% which I shorted late last week (Real-Time Alerts)
- Yen was down another -1.5% vs. USD last week and remains Bearish on both our TRADE and TREND durations
- GBP/USD was up +1.8% last week and remains Bullish on both our TRADE and TREND durations (BOE this week)
- Argentina’s Peso continued in its #Quad4 Crash, down another -1.7% last week to -18.6% in the last 3 months
- Turkey’s Lira continued in its #Quad4 Crash, down another -1.2% last week to -19.7% in the last 3 months
What if everything Global Growth #Slowing (i.e. #Quad4) had “AI” in Argentina or Turkey? Would The People there not notice such an evisceration of their real purchasing power?
In Japan, companies actually want some sustained inflation. Reminder: that’s when Corporate Profits #accelerate (like they were #Accelerating during #Quad2 US Inflation in 2021 when we were bullish on the Corporate Profit Cycle, Growth, etc.).
Despite the recent break-down in the Japanese Yen, we still have the Japanese economy in #Quad1 and:
A) Japan’s stock market was up another +4.5% last week to +12.9% in the last month alone
B) That even beats the beloved AI Narrative (NASDAQ) at +10.9% in the last month
We’re currently NOT Short the NASDAQ and/or Tech (XLK) because they are signaling Bullish TREND @Hedgeye. That’s not new this morning. Those #VASP (Volatility Adjusted Signaling Process) outputs are in my daily Risk Range product.
What do those signals mean? Well, from a #process perspective, they mean that MAJOR components of both the AI Narrative and the Index/ETFs had a POD 1 (REVENUE) #acceleration in the recent quarter DESPITE the US economy #slowing into #Quad4.
‘But KM, where do you see that?’
A: almost everywhere, ex-NASDAQ and Tech (XLK, which is essentially 4-5 stocks). MSFT and NVDA had POD 1 #accelerations.
We see it in the aforementioned Currency Market and the following #Quad4 Commodities Market:
A) Oil’s (WTI) Consumption Demand Signal
B) Copper’s Industrial Recession Signal
C) Corn’s (Ag proxy) Consumption Demand Signal
Most glaringly, you can see the #Quad4 economic slowdown in both the Economic Data and the Yield Curve:
A) 10s2s Yield Curve re-inverted another -10 basis points last week falling -40bps in the last month alone!
B) That puts the 10s2s Spread at a new #Quad4 in Q2 Cycle LOW of -95 basis points
Interestingly, but not surprisingly, we also registered an intermediate-term TREND Signal break-down on the longest-end of the Yield Curve last week:
A) UST 30yr Yield was DOWN -3 basis points on the week (#diverging from the 2yr Yield +10bps wk/wk)
B) UST 30yr Yield is DOWN -1 basis point in the last month vs. the 2yr Yield at +66bps over the same Cycle Time
Why? Because the economy is slowing into another expected Fed RATE HIKE in July. We remain Long BNDD.
So, as a matter of #process, I’ll reiterate what we thought would happen 19 months ago with the Fed raising rates into a #Quad4 slowdown: i.e. an ongoing Credit Event…
Do you have Cycle Time as your priority today? Or is chasing someone else’s quarter-end performance bogey where you’re at? Coach Wooden would always ask his players:
“If you don’t have time to do it right the first time, when will you have time to do it over again?”
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.80-3.95% (bearish)
UST 10yr Yield 3.63-3.85% (neutral)
UST 2yr Yield 4.45-4.78% (bullish)
High Yield (HYG) 74.07-75.14 (bearish)
SPX 4211-4441 (bearish)
NASDAQ 12,991-13,895 (bullish)
RUT 1 (bearish)
Tech (XLK) 161-176 (bullish)
Industrials (XLI) 99.44-105.96 (bearish)
Financials (XLF) 32.48-33.75 (bearish)
Shanghai Comp 3182-3278 (bearish)
Nikkei 31,592-34,291 (bullish)
VIX 13.28-20.89 (bullish)
USD 101.60-104.85 (bullish)
EUR/USD 1.062-1.097 (bearish)
USD/YEN 138.96-142.67 (bullish)
GBP/USD 1.244-1.289 (bullish)
Oil (WTI) 66.90-73.51 (bearish)
Oil (Brent) 72.14-77.24 (bearish)
Nat Gas 2.16-2.70 (neutral)
Gold 1 (bullish)
Copper 3.65-3.93 (bearish)
Silver 23.30-24.65 (bullish)
MSFT 320-349 (bullish)
NVDA 361-445 (bullish)
Bitcoin 24,969-26,998 (bearish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
