“This is the best kind of wisdom, because it was earned the hard way.”
-Lebron James
That’s how Lebron James described his good friend and Founder/CEO of Klutch Sports Group, Rich Paul, in his Foreword to one of the more educational #behavioral books I have read in a long time: Lucky Me – A Memoir Of Changing The Odds.
“So when you flip these pages and witness the kind of pain that we felt growing up, don’t flinch. Hard truths make us stronger.” -King James
The hard truths about what happened to me in hockey rinks and on the Real Streets of life shaped me. I know how I write and work isn’t for everyone. I don’t do this for everyone. I do it for my family, my firm, and our community of subscribers.
Back to the Global Macro Grind…
When someone tells me (or tweets at me anonymously) that I sound like I have a “chip on my shoulder”, I smile inside. Why? Without that chip… without that profound inner want/need to prove people wrong… they’d end up being right.
On my 3rd Institutional Client call of the day yesterday, I was asked about “they.” When I talk or write about “they” and/or “them”, what am I alluding to?
A: The other team.
Especially when I’m winning, I almost need to create a hyped-up version of who they are. They really aren’t as good as they are perceived to be. But I don’t want the other team to be weak. As I’ve always said on the ice, I want good games.
So the client (who runs one of the largest hedge funds in the world) starts asking me about what I thought about Bill Ackman’s “big reveal on bonds.” Just like two real players on a pond, we both started laughing at the same time…
Everyone playing The Game at the highest level would get the joke.
Bill, of course, is a bottom-up stock picker who has no Global Macro #process and/or track record to speak of on that front. He fancies himself as a version of Warren Buffett (ask him), and did make a good “call” on bonds recently, but…
Anyone can make a good “call” on anything. Not everyone can execute on a Global Macro Risk Management #process, accurately, across many Cycles for many years.
No need to waste any more air-time on that.
What we need to do is just execute on the #NextPlay. For some of our largest Global Macro Asset Allocations, Fading Bill On Bonds isn’t nearly enough. Doing that in Macro Tourist isolation would make us look like rookies.
Here were the next plays:
A) We bought more US Dollar on red (2 days ago) taking UUP to my #4 position in The MFO (Long Only)
B) We bought more on the Short-end of The Curve (FDRXX, TBIL, TFLO, and BUXX)
C) We bought more Interest Rate Hedge (PFIX is up to the #9 position in The MFO Asset Allocation Portfolio)
Like shorting Ackman’s Long JC Penney (JCP) idea way back when, those ABC moves were pretty simple ones to make.
To some, what we do isn’t simple. It’s so foreign to them that all they can do is criticize my personality for it. In many ways, that’s why these guys from The Hood (Malcolm Jenkins, Rich Paul, etc.) resonate with me more than CNBC’s “stars.”
Make no mistake. Everything I do, I’ve earned the hard way. I rose to what I thought was the pinnacle of my pro career at 33 years old becoming a Portfolio Manager and “Managing Director” at Carlyle on my P&L numbers for the prior 7 years.
Then I got fired.
I got fired in NOV of 2007 for “being too bearish” … I packed my s---t in a box, took the train home, and told my pregnant wife (expecting our 1st child that week, #classy) that I will never work for someone on the Old Wall, ever again.
Ever since, I have been building and evolving my #process. What you see today is not only EVERY #timestamp in Real-Time (Coaching) Alerts, but every Asset Allocation move in that Long Only model. It’s been feeding my family since 2008.
I’m not going to review what my P&L did in 2008 vs. Bill’s or Becky’s. Anyone who’s in The Game knows I had a very different score that year. I had a very different score last year too.
But it’s never about the calendar year. It’s always been about the grind. It’s daily. It’s the only thing that keeps me going. It’s all about making the next play across the Full Investing Cycle.
Oh, I shorted more Rate Sensitivity (via Utilities, XLU) yesterday too. Lots of ways to Fade Bill On Bonds, eh. Since he gave up playing The Game from the Short Side, I need to find another “them” to play against on that! Any takers?
I have immediate-term upside in my UST 2yr and 10yr Risk Range™ Signals towards 5.24% and 5.06%, respectively.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.79-5.18% (bullish)
UST 10yr Yield 4.66-5.06% (bullish)
UST 2yr Yield 4.97-5.24% (bullish)
High Yield (HYG) 71.33-72.96 (bearish)
SPX 4175-4325 (bearish)
NASDAQ 12,855-13,420 (bearish)
RUT 1 (bearish)
Tech (XLK) 162-169 (bearish)
Energy (XLE) 86.70-92.95 (bullish)
Utilities (XLU) 56.99-59.99 (bearish)
VIX 16.70-22.90 (bullish)
USD 105.42-106.93 (bullish)
EUR/USD 1.047-1.067 (bearish)
Oil (WTI) 82.51-89.92 (bullish)
Gold 1 (bullish)
Bitcoin 29,103-35,301 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
