“Yes, the credentialed class did well on average, but…”
-Peter Turchin
Yep, I’m going to run it right up the middle on my Private Equity pal from Carlyle (that’s where I used to work), Jay Powell, this morning. But first, let’s look at how the non-Powell-PE lawyers have been doing since getting their credentials:
Looking at the NALP (National Association of Law Placement) data, Peter Turchin points out that “for the class of 2020, the left bulge flattened a bit to salaries between $45k and $75k, accounting for 50% of reported salaries. But the right hand peak was now at $190k, with over 20% of the distribution. There were very few salaries between the two peaks.”
“This is what the aspirant game looks like when pushed to its extreme. The 20% in the right peak, with their $190k salaries, are well on their way to joining the established elites. Those who are in the lump on the left are in trouble. Considering that half of law school graduates in 2020 amassed debts of $160k or more… most of them will be crushed by the debt.” -End Times, pg 92
Back to the Global Macro Grind…
Crush or be crushed by real world Cost Of Living (i.e. inflation)!
Unless you’re in da Powell Club or subscribed to Hedgeye’s Long Inflation positioning, you are going to get crushed by Re-Accelerating Inflation. For those of you raising an American family, next week I’ll write about the relentless inflation in education.
So, did Powell lie?
You can go back and watch Powell’s presser post the last Federal Reserve rate hike. At the time, the odds of another Fed Rate hike in SEP were rising and pretty much EVERY Old Wall journo question anchored on what would make him hike again.
A: “we’ll be watching the incoming data, we have 2 inflation reports to look at…” blah, blah, blah.
So the simple no-Old-Wall-spin answer is that if he doesn’t raise rates next week, he lied.
I’m not going to waste your time reviewing either the headline CPI or PPI reports from the last 2 weeks or “Powell’s preferred way to read PCE, ex-shelter.” They #accelerated again. Period.
What else is #accelerating this morning?
A. Our Long Oil position is inflating another +0.5%, taking it to an eye-watering +35.6% inflation since June
B. The price of US Eggs and Poultry (chicken) have inflated +40% and +11%, respectively, in the last month alone
And how many of you who still rent got a RENT CUT instead of what the Elites on the Old Wall are begging for (rate cuts)? How about (for those of you who are raising kids) a discount on your child’s pre-school, prep-school, or college education?
Oh, right. Some of the US Political Elites have an answer for all of that too. Just “forgive” the Student Loan and/or Real Estate Debt (did you see what Powell did for PE on that front during the pandemic?) and tack it onto our $33 TRILLION in US Debt.
All good. No inflation to see here since the last Fed meeting…
Unfortunately for Powell, it’s not just me who has the spine to call him out this morning. Both the Global Currency and US Treasury Bond Markets are calling out real world and real-time INFLATION #accelerating for what it is:
- Oil’s Risk Range™ Signal is delivering yet another daily #BHL (big-higher-low) at $85.02
- US Dollar Index’s Risk Range™ Signal is delivering yet another daily #BHL at $104.06
- UST 2 and 10 year Yield Risk Range™ Signals are delivering #BHLs at 4.89% and 4.17%
As a reminder, in my #VASP (Volatility Adjusted Signaling Process), when something is:
A. Signaling Bullish on both my TRADE and TREND durations and
B. Signaling #BHLs and #HHs (higher-highs) in my Risk Range™ Signals
Then the probability is RISING that these Bullish TRENDs in Oil, USD, and Rates are going to continue, no matter what some unelected lawyer needs and/or wants for his Elite buddies at Carlyle.
Actually, let me re-state that because what I just wrote was wrong. Powell trying to do what his buddies need/want (no rate hike in SEP) was one of the TOP market catalysts to Re-Accelerate Inflation!
Jay, if you don’t fade these magically newfound and manipulated Fed Fund Futures “expectations” for NO HIKE next week… on behalf of the Non-Elite People of the United States of America, shame on you.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.27-4.45% (bullish)
UST 10yr Yield 4.17-4.38% (bullish)
UST 2yr Yield 4.89-5.06% (bullish)
High Yield (HYG) 74.24-75.06 (bearish)
SPX 4 (bearish)
NASDAQ 13,570-14,097 (neutral)
RUT 1 (bearish)
Tech (XLK) 169-176 (neutral)
Energy (XLE) 89.38-93.75 (bullish)
Utilities (XLU) 61.10-65.37 (bearish)
Shanghai Comp 3096-3175 (bearish)
Nikkei 32,555-33,571 (bullish)
BSE Sensex (India) 66,008-68,084 (bullish)
DAX 15,601-15,994 (bearish)
VIX 12.71-16.41 (neutral)
USD 104.06-105.38 (bullish)
EUR/USD 1.062-1.082 (bearish)
USD/YEN 145.90-148.29 (bullish)
GBP/USD 1.238-1.261 (bearish)
CAD/USD 0.728-0.742 (bearish)
Oil (WTI) 85.02-91.21 (bullish)
Oil (Brent) 88.08-94.20 (bullish)
Nat Gas 2.49-2.90 (neutral)
Gold 1 (bullish)
Copper 3.71-3.90 (neutral)
Silver 22.38-24.40 (neutral)
AAPL 168-182 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
