Oscillating Quads

“Welcome to the early and awkward emergence of the next American republic.”
-Neil Howe

Does this market morning seem a little awkward to you? Is something a little off? Or do you just want to take some time off from the madness of #MOAB? You’ll get over it. It’s just another month-end markup where Institutional Managers had to chase.

If it wasn’t #MOAB (Mother Of All Bubbles), they wouldn’t have to keep chasing their bubbles, would they? Some of them come and go. Some will probably never come back. SPAC Jesus is sleeping in. Luna Coin is at 50 cent.

All the while the SEC is ordering Coinbase to halt trading in all #MOAB “coins” other than Bitcoin. Blackstone’s BREIT has finally turned Net Seller “to meet redemptions and serve the AI boom.” I couldn’t make all of this up if I tried.

Back to the Global Macro Grind…

Welcome to another Macro Monday @Hedgeye where there is no time off. There is no sleeping in. The measuring and mapping #process will be executed on. The ROC (rate of change) = economic reality. The Old Wall will continue to spin.

Last week’s narrative was “but Consumer Confidence improved”… then on Friday, after the broader Consumer Confidence reading out of the University of Michigan #slowed, the Old Wall Media didn’t mention it.

As we’ll outline with our latest US GDP Nowcasts that now span the 1^st half of 2024, we have Oscillating Quads within a downward-dog of Real Growth #slowing US TREND (should be oscillating between #Quad3 Stagflation and #Quad4).

And all the while, I’ll continue to rely on my #VASP (Volatility Adjusted Signaling Process) to risk manage it in real-time.

So let’s start with the Global Currency market’s week-over-week moves:

1. US Dollar Index was up for the 2^nd straight week and the 4^th in 6 after Bloomberg declared it dead
2. EUR/USD was down -0.7% last week, breaking bad, back to Bearish TRADE and TREND
3. Japanese Yen has a bear market bounce of +1.0%, but is straight back down by -0.8% this morning
4. GBP/USD was +0.1% last week, signaling lower-highs, but still signaling Bullish TRADE and TREND
5. Russian Ruble was down another -1.5% vs. USD last week, crashing -13.1% in the last 3 months
6. Argentina’s Peso was down another -1.5% vs. USD last week, crashing -18.6% in the last 3 months

Go tell someone in Argentina or Russia that the US Dollar is “dead” and they’ll probably ask you for yours. Argentina is running with headline INFLATION of +113% year-over-year and a Real GDP Recession of -4.6% year-over-year.

So, in the spirit of some cool new AI Doge Coins or whatever, if you want to let the US government devalue the US Dollar and take headline US inflation back up towards +5-7% at this time next year, have at it. As long as it keeps your SPY Monkey up, eh!

On that score, Commodity INFLATION continued to re-accelerate last week:

1. CRB Commodities Index reflated another +1.5% to +8.2% in the last month alone and is back to Bullish TREND
2. Oil (WTI) reflated another +4.5% last week to +15.6% in the last month and is Bullish TRADE and TREND as well
3. Copper reflated +2.8% on the week and is one of the few major commodities NOT back to Bullish TREND

I know. If you have big time friends who wouldn’t know the price of things because they don’t affect them, that’s ok (as long as they don’t rub “the consumer is in great shape” in the face of the wrong people), but they’re still re-flating:

A) Gasoline was reflated another +5.5% last week to +18.4% in the last month
B) Orange Juice reflated another +5.7% last week to +24.1% in the last month

And the prices of Bacon (lean hogs) and Eggs have reflated +11% and +17% in the last month, respectively, too.

All good, if you’re long INFLATION:

A) Energy Stocks (XLE) led US Equity Sector Styles at +1.8% last week after breaking out to Bullish TREND
B) Basic Materials (XLB) shared that XLE performance with a +1.8% weekly inflation too

The Bond Market gets that Inflation Re-Accelerated in July:

A) UST 2yr Yield was up another +4 basis points on the week and remains Bullish TRADE and TREND
B) UST 10yr Yield was up another +12 basis points on the week and is also back to Bullish TRADE and TREND

It was another good week for our #process-driven Global Equity Asset Allocations in Japan (which was +1.4% last week and up another +1.3% this morning), India, South Korea, Indonesia, and Brazil. But few Perma US Bulls want to hear about those.

Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets

UST 10yr Yield 3.75-4.03% (bullish)
UST 2yr Yield 4.69-5.01% (bullish)
High Yield (HYG) 74.54-75.68 (bearish)            
SPX 4 (bearish)
NASDAQ 13,881-14,435 (bullish)
RUT 1 (bearish)
Tech (XLK) 173-181 (bullish)
Financials (XLF) 34.38-35.75 (bearish)
Defense (ITA) 114-118 (bullish)
Healthcare (PINK) 26.46-27.46 (bullish)
Nikkei 32,281-33,301 (bullish)
BSE Sensex (India) 65,801-67,562 (bullish)
VIX 13.01-16.16 (neutral)
USD 99.67-102.16 (bullish)
EUR/USD 1.093-1.114 (bearish)
USD/YEN 138.71-142.93 (bullish)
GBP/USD 1.275-1.299 (bullish)
Oil (WTI) 75.08-81.93 (bullish)
Oil (Brent) 79.47-85.51 (bullish)
Nat Gas 2.51-2.83 (neutral)
Gold 1 (bullish)
Copper 3.77-3.96 (bearish)
Silver 24.02-25.69 (bullish)
Bitcoin 28,801-29,993 (bearish)

Best of luck out there this week,
KM

Keith R. McCullough
Chief Executive Officer