“If you are an American and your net worth is in the $1-2 million range, you are roughly in the top 10%.”
-Peter Turchin
After yesterday’s beat-down in what mostly everyone on CNBC owns, maybe some people are feeling less “rich” this morning. Maybe not. As you know, I struggle with the whole “feelings” thing…
Despite our blessings and hard earned capital, a LOT of people are struggling. If you’re not in the $1-2M range (or higher), you’re going to “feel” this recent ramp in Oil and gas prices. You were already feeling it everywhere else in your cost of living.
This is going to feel like a hard topic for people on Wall Street to deal with as some try to declare victory on the Fed’s war with inflation. Inflation is re-accelerating right now. The Bond Market gets it – so do The People.
Back to the Global Macro Grind…
The aforementioned quote comes from a book I talked about at yesterday’s Hedgeye Company Meetings at Chelsea Piers in Stamford, CT. I’ve cited it once already in an Early Look. It’s called End Times: Elites, Counter-Elites, and The Path of Political Disintegration.
Do you consider yourself elite?
“Who are the elites? If I were a betting man, I’d predict that 99% of my readers would answer no! So let’s define what I mean by elites… in sociology, elites are not those who are somehow better than the rest. They are simply those who have more social power. A more descriptive term for elites is power holders.” -Turchin
Using that definition, I am not one of the elites.
Personally, I’m proud of that. I don’t want to be part of Old Wall Street and its establishment media. They’re constantly spinning everything as bullish and economically sound. It’s a joke. And most of The People know that too.
Who are The People? Well, let’s just start with who 50% of them are not:
A) The median household income in America is around $70,000
B) The 50 percenters are NOT the 10 percent who are worth $1-2M
When someone in Gen-X working for an Industrial Production company gets fired because US Industrial Production is now running DOWN -0.43% year-over-year … and the price of gas goes up 10-15% in a month…
And on CNBC an Old Wall dude named “Farmer Jim” says the economy “is doing quite well”…
What do you think they’re thinking? At a minimum, I’m thinking they’re thinking that they are being lied to. And how about their kids? Let’s say they’re in Gen-Z and they were working for a cool Profitless Tech company, but lost their job…
Because … the company they worked for is profitless!
FACT: A LARGE percentage of Gen-Z and Millennials are living paycheck to paycheck. As you can see in our Chart of The Day, approximately 70% of them are living paycheck to paycheck with > 50% of them “somewhat or very financially dependent on parents.”
How this ultimately plays out is going to define the NON-recovery we are currently nowcasting for the next 3 quarters.
In the meantime, the elites who run the place (Wall Street, Washington, etc.) are “seeing” rainbows and AI puppy dogs in their current “Year-to-date” stock market return and associated compensation.
It’s too bad that the stock market isn’t the real economy.
While The Bond Market sees the recent re-acceleration in real world inflation for what it is (hawkish, with the UST 2yr Yield up +12 basis points on the week), the stock market has been largely impacted (and manipulated) by VERY short-term options activity.
We’ll see the #MOAB of monthly US Equity Options expire today. A record (for July) of $2.3 TRILLION in notional will expire and we’ll turn the page to a RATE HIKE into an ongoing Earnings Recession next week.
Is that why those who are “feeling” pretty elite about their “bullish charts” got bludgeoned yesterday? Goldman’s “High Retail Sentiment” (i.e. what Retail Investors with money own) and “Profitless Tech” baskets were down -6.5% and -4.0%, respectively?
That didn’t happen to my hard-earned capital. I’m long Healthcare (up +1.7% on the day), Defense Stocks (ITA), Japan, Gold, etc. I don’t own what everyone on CNBC owns. I don’t lie to The People like some of them do either.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.82-4.08% (bullish)
UST 10yr Yield 3.70-4.06% (bullish)
UST 2yr Yield 4.60-5.03% (bullish)
High Yield (HYG) 73.75-75.66 (bearish)
SPX 4 (bearish)
NASDAQ 13,605-14,397 (bullish)
RUT 1 (bearish)
Tech (XLK) 170-181 (bullish)
Financials (XLF) 33.28-35.55 (bearish)
Defense (ITA) 115-119 (bullish)
Healthcare (PINK) 25.90-27.32 (bullish)
Shanghai Comp 3151-3234 (bearish)
Nikkei 31,814-33,174 (bullish)
DAX 15,603-16,251 (neutral)
VIX 13.11-16.51 (neutral)
USD 99.51-102.22 (neutral)
EUR/USD 1.093-1.123 (bearish)
USD/YEN 137.51-142.51 (bullish)
Oil (WTI) 72.91-77.47 (bullish)
Oil (Brent) 77.41-81.66 (bullish)
Nat Gas 2.45-2.85 (bullish)
Gold 1 (bullish)
Copper 3.69-3.97 (bearish)
Silver 23.01-26.26 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
