“To build may have to be the slow and laborious task of years. To destroy can be the thoughtless act of a single day.”
-Winston Churchill
To watch the momentum build into #MOAM (Mother of All Month-end Markups) was a historical sight to see. It was backstopped by both #MOAB (Mother of All Bubbles) herd behavior and single day 0DTE options chasing.
I don’t think it all gets “destroyed” in a “single day”…
But I do think it comes undone slowly, then all at once.
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye!
As a matter of #process, we like to start with what most newly minted stock picking and options trading geniuses don’t measure and map - the Global Currency Market:
- US Dollar Index had its 1st down week in the last 3, down -0.6% on the week, signaling BUY on Friday
- EUR/USD was +0.3% last week and remains Neutral TREND
- Japanese Yen had a big +1.7% Counter @Hedgeye TREND bounce vs. USD last week (signaling SELL on Fri)
- GBP/USD was up another +0.9% last week and remains Bullish on both our TRADE and TREND durations
- Russia’s Ruble was down another -2.1% vs. USD last week and remains Bearish TRADE and TREND
- Hungary’s Forint was down -2.6% vs. USD last week and remains Bearish TRADE and TREND
What? You only trade TSLA Yolo Weeklies and don’t care about what’s going on in Budapest? That’s ok. Breathe. And just know that it’s pronounced Boo-dah-pesht!
Commodities enjoyed the Down Dollar week. That’s what we call a TRADE and not a TREND, however:
- CRB Commodities Index was +0.9% last week to -2.8% in the last 3 months and remains Bearish TREND
- Oil (WTI) went bullish on our TRADE duration, closing up +4.6% last week, but remains Bearish TREND
- Copper had a +0.6% Counter @Hedgeye TREND bounce too last week to -5.8% in the last 3 months
- Natural Gas got tagged for a -7.4% loss last week and is trying to make up its mind around TREND
- Soybeans were down another -1.9% last week to -11.7% in the last 3 months and remain Bearish TREND
‘But, KM, what about stah-ks. All I care about are my 7 stahks!’
Kidding (not really), but US Stocks were indeed down last week:
A) Russell 2000 (our only Index Short) was down -1.3% last week to -23.7% from its Cycle Peak
B) Basic Materials (XLB) were down -2.0% last week after being added to our Core Sector Shorts
I don’t want to be considered “insensitive” to what other people are Long or Short. But, on that score, I really only have time and space in my thick hockey-head to focus on where I am positioned!
Anyone Short Europe?
A) France (EWQ) remains a Top 3 Signal Strength Euro Short for us and was down -3.9% last week
B) Germany’s DAX dropped -3.4% last week, breaking bad to Bearish @Hedyeye TREND
While France, Austria (EWO), and Finland (EFNL) were already signaling Bearish on both our TRADE and TREND durations, Germany’s DAX wasn’t until last week.
Das DAX is a good example of something coming undone slowly, then all at once.
Anyone Long India (INDA)?
A) We are and it was up another +0.9% in a sea of Global Equity red last week
B) India’s BSE Sensex is up +3.1% and +11.4% in the last 1 and 3 months, respectively
How about Long Japan (EWJ) vs. Short China via Hong Kong (EWH)?
A) Japan’s Nikkei finally corrected -2.4% last week to +17.7% in the last 3 months
B) Hong Kong’s Hang Seng was down another -2.9% last week to -9.7% in the last 3 months
So… the ole hockey-head guy covered-SOME Hong Kong and bought-MORE Japan on red last week, eh.
Gold was +0.3% last week but none of the Meme Dudes care. Gold’s Volatility (GVZ) has collapsed towards 12 and Full Cycle Investors who have been long it since NOV 2022 only buy-MORE it WHEN it is at the LOW end of its Risk Range.
Oh, I almost forgot… last week, there was this thing called the Bond Market signaling that the Fed is going to continue to tighten as US Earnings Continue To Slow…
Gold being up despite the UST 10yr Yield being up +24 basis points last week was impressive. I’m not easily impressed. But Floki’s Fractal Signal getting me #out of 10yr Treasuries pre that move impressed me!
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.75-4.08% (bearish)
UST 10yr Yield 3.64-4.10% (bullish)
UST 2yr Yield 4.65-5.10% (bullish)
High Yield (HYG) 73.37-74.68 (bearish)
SPX 4 (bearish)
NASDAQ 13,410-13,836 (bullish)
RUT 1 (bearish)
Tech (XLK) 166-175 (bullish)
Industrials (XLI) 102.99-107.50 (bearish)
Financials (XLF) 32.23-33.99 (bearish)
Defense (ITA) 113-118 (bullish)
Healthcare (PINK) 25.68-26.63 (bullish)
Shanghai Comp 3154-3254 (bearish)
Nikkei 32,151-33,932 (bullish)
DAX 15,501-15,973 (bearish)
VIX 13.39-17.08 (neutral)
USD 101.76-103.48 (neutral)
EUR/USD 1.083-1.098 (neutral)
USD/YEN 142.01-145.40 (bullish)
GBP/USD 1.259-1.282 (bullish)
Oil (WTI) 67.31-73.96 (bearish)
Oil (Brent) 72.28-78.35 (bearish)
Nat Gas 2.47-2.90 (neutral)
Gold 1 (bullish)
Copper 3.62-3.88 (bearish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
