Sell SPY, HYG, etc.

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“It’s not often that you come across and individual who excels in every aspect of their life.”
-Tom Brady

That’s what The GOAT wrote about Malcom Jenkins in his Foreword to a #behavioral book I just started reading titled What Winners Won’t Tell You.

“Malcom’s commitment to the next generation is a testament to his character and a shinning example of what it means to be a true leader and live a life of purpose and integrity.”

Love that leadership. And you don’t have to play in the NFL for 13 seasons, win 2 Super Bowls, and be a 3x Pro Bowler to be that way. Nope, you need to be who you are. We can all #GetBetter at everything we do, every day.

Back to the Global Macro Grind…

What well known winners on Wall Street will tell you is that they don’t know a lot of winners who go both ways and play The Game from the Short Side.

I’m neither “well known” nor do I care what “they” do or say. I do what I need to do for my teammates and community, every single game day.

I’m inching up on Game 6,000 (trading days in my career). And, if you can’t tell, I absolutely love trying to win games!

Have you ever received a note from Goldman or JP Morgan that says “Sell SPY” in the title of the note? How about “JOLTing me to -14.7% Net SHORT”, like the one I wrote on AUG 30^th, 2023?

Why?

From an Old Wall banker or broker’s perspective, “winning” is in either having you pay them for banking and/or brokering… or selling you someone else’s stock. Either way, you’re either buying what they’re selling you…

Or, like me, you can also win by selling (shorting) what “they’re” asking you to buy.

When you boil The Game down to its bear bones, it gets a LOT easier to understand. The problem, of course, with the Old Wall and its conflicted and compromised media is that they don’t have any skin in The Game. I do.

So let’s do this.

Let’s strap on the transparency and accountability pants and show you my Long/Short positioning for today’s game (I just went back to -13.% Net Short from +0.3% Net Long on October 5, 2023):

LONGS:

1. FDRXX (High Yielding Cash held in Money Market)
2. TBIL (3 month Treasuries)
3. TFLO (floating rate Treasuries)
4. UUP (US Dollar)
5. CTA (Managed Futures)
6. BTAL (Anti Beta Equities)
7. PFIX (Interest Rate Hedge)
8. SQQQ (Short QQQ)
9. SMIN (Small Cap India)
10. Insurance (IAK)

I know. That’s NOT the portfolio that consensus CNBC types own. That’s called a Full Investing Cycle portfolio of Longs (re-ranked for what I bought/sold yesterday, incrementally) that Goes Anywhere, anytime.

As you can see in our Chart Of The Day (= our recently launched Portfolio Solutions product that prints either daily or weekly depending on your subscription level), Oil, Energy Stocks, and Japanese Stocks are no longer in my Top 10.

I sold-SOME of those positions on green. That’s what I do. I don’t chase.

SHORTS (again Top 10 re-ranked, by position SIZE, for yesterday’s moves):

1. HYG (High Yield Bonds)
2. SPY
3. OXLC (High Yield CLO exposure)
4. JNK (Junk Bonds)
5. QQQ
6. FXE (Euros)
7. XLK (Bubble Cap Tech)
8. AAPL
9. XLI (Industrials)
10. IWM (Russell 2000)

Instead of writing you rear-view looking market commentary about “Dovish Fedspeak” (a Fed Head made hawkish comments overnight, but “they” won’t highlight that today @CNBC), I’m the guy on defense who’s playing offense.

Even though my Long/Short Positions were ranked differently on AUG 1, 2023, you can run the replay tape on how my Long/Short Portfolio has done since. Unlike most, I didn’t have a drawdown. I saved and made money.

“They” thought July’s bear market LOWER-highs in everything from the Russell (IWM) to Industrials (XLI) to High Yield (HYG) was the beginning of a “broadening bull market breakout.”

And that, my friends, was dead wrong.

Might I be “wrong” for another day? Sure. As of SEP 2023 end, out of 7,364 #timestamped Real-Time (Coaching) Alerts that date back to calling the 2008 Crash, I’ve been wrong 1,582 times.

Might I be right? I expect to be.

And if you don’t wake up every day, expecting to win, you never will.

You have to put in the work. And I mean the real work that most people who don’t win at the highest level will never understand. You have to do it for MANY years.

And you have to be supported by great teammates who are doing the same alongside you…

The result of your Full Investing Cycle life won’t be about making a “big call.” It will be about both the evolution and repeatability of your #process.

The Final Score (for Malcolm Jenkins): 199 games played across 13 NFL seasons, with 1,044 tackles, 51 of them for losses, 35 quarterback hits, 13.5 sacks, 11 fumble recoveries, 20 forced fumbles, 110 pass deflections, 21 interceptions, 8 touchdowns,  2 Super Bowl Wins, 3-time Pro Bowler.

And that was as a Defensive Back. That “poor” boy from Piscataway, New Jersey was a baller who could play both ways at the highest level.

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

UST 30yr Yield 4.63-5.01% (bullish)
UST 10yr Yield 4.51-4.86% (bullish)
UST 2yr Yield 4.95-5.17% (bullish)
High Yield (HYG) 72.01-73.53 (bearish)           
SPX 4 (bearish)
NASDAQ 12,965-13,614 (bearish)
RUT 1 (bearish)
Tech (XLK) 161-171 (bearish)
Energy (XLE) 84.22-92.61 (bullish)
Utilities (XLU) 55.02-59.72 (bearish)                                               
VIX 16.30-20.56 (bullish)
USD 105.20-107.01 (bullish)
EUR/USD 1.044-1.063 (bearish)
Oil (WTI) 82.46-93.39 (bullish)
Nat Gas 2.94-3.53 (bullish)
Gold 1 (bullish)
Copper 3.50-3.74 (bearish)
AAPL 168-180 (bearish)

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer