“Every wave has a wavelength. And every social cycle has a periodicity.”
-Neil Howe
If you study long-term cycles and pay attention to my Partner Neil’s longer-term research, you’ll get smarter, faster. If you didn’t know that being Perma Bull Long “what you know” is a Social Cycle thing, now you know.
You didn’t know you didn’t need to dog-pile your hard-earned capital into AAPL after they guided to zero growth? What? Are you out of your mind? It only has $2.9 TRILLION in market cap this morning after signaling Bullish TREND on Friday!
As Neil goes on to explain about a Social Cycle, “we can simply measure it across multiple cycle peaks. But to understand why the cycle has any given length… we need to know about what determines it.” (pg 162). Hint: Flows In The Machine…
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where they’re going to try to FLOW the hard-earned capital of The People (who wouldn’t know otherwise) into “STOCKS” for the 19th straight #MarkupMonday!
While we know what that means in the short-term (flow into #MM7 and OUT of pretty much everything else, including Bonds, Global Currencies, Global Equities, Oil, Commodities, etc.), longer-term, few know how it ends.
For those of you looking for a heuristic on that, we call it #MOAB (The Mother of All Bubbles).
Regardless, we won’t lose our focus and/or discipline this morning. Let’s start with analyzing Global Currencies:
- US Dollar Index was up another +0.8% last week and up for the 9th week in the last 12 = Bullish TREND
- EUR/USD was down another -0.6% last week and remains Bearish on both our TRADE and TREND durations
- Japanese Yen was down another -1.4% last week to -4.7% in the last 3-months and remains Bearish TREND
- GBP/USD was down another -1.4% last week to -4.2% in the last 3-months and remains Bearish TREND
- Canadian Dollar was down -1.2% vs. USD last week to -3.1% in the last 3-months and remains Bearish TREND
- Chilean Peso was down -4.2% vs. USD last week to -7.3% in the last 3-months and remains Bearish TREND
Key words from the Global Currency Market (which, like AAPL, has ZERO Growth in prices of currencies on a TRENDING basis) = REMAINS in RECESSIONS.
The other obvious impact a Strong Dollar starts to develop WHEN the USA joins the Global RECESSION is that it disinflates the prices of COMMODITIES as demand slows. Look no further than Oil prices as the USA entered a RECESSION here in Q4:
- CRB Commodities Index disinflated -3.0% last week to -2.3% in the last month = Bearish TRADE and TREND
- Oil (WTI) disinflated another -4.2% last week to -8.2% in the last month = Bearish TRADE and TREND too
- Dr. Copper was down another -2.6% last week to -4.7% in the last 3-months = Bearish TREND
- Corn was down another -2.8% last week to -6.5% in the last 3-months = Bearish TREND
- Palladium disinflated -13.3% last week, taking its crash in the last 3-months to -25.0%
So… it’s a good thing AAPL iPhones aren’t commodities, eh?
It’s an even better (no joke) thing that we are neither long of PALL (Palladium) nor riding our former non-RECESSION assumption for the USA when the USA wasn’t entering a recession in Q3 (we were Long Oil, don’t forget!).
RECESSION? Did you see the US Consumer Confidence data from Friday? It #slowed (again) to 60.4 in NOV vs. 63.8 in OCT with 1yr INFLATION Expectations rising to 4.4% from 3.8% prior.
NEWSFLASH: when you lose your job, you lose confidence and COST of living becomes extra inflationary.
The Long-end of the US Treasury Bond Market gets these recessionary expectations (Perma Bulls see that as a green light to chase #MM7 Stocks, for now), but the Short-end (UST 2yr Yields) sees INFLATION sticking:
A) UST 2yr Yield was up a big +18 basis points (bps) last week to +8bps in the last month
B) UST 30yr Yield was only +4 basis points last week and is DOWN -10bps in the last month
Ex-MOAB #BubbleCap Tech (XLK), which has 3 stocks = 50% of the Sector Style, most stocks even got that message:
A) Russell 2000 was DOWN -3.2% last week taking its DRAWDOWN to -14.6% since the end of July’s lower-highs
B) #MOAB Tech (XLK) was UP +4.3% last week taking it ALL the WAY back to where it was in July!
To be clear, our #VASP (Volatility Adjusted Signaling Process) nailed this Oil/Energy (DOWN), #MOAB Tech (XLK) UP move. You’ll see it still says BULLISH TREND on XLK in our RISK RANGES product this morning…
But, longer-term, what does it mean?
I don’t know. I hope everyone who’s forced to chase it again knows. All I know is that I’m going to stay with my Full Investing Cycle Shorts that keep working (i.e. signaling Bearish @Hedgeye TREND) for me:
A) US Real Estate (XLRE) was DOWN another -2.6% last week to -9.1% in the last 3-months
B) China (Hang Seng, EWH) was DOWN another -2.6% last week too to -10.6% in the last 3-months
Never has a Go Anywhere Global Macro Strategy been more valuable as The People have been forced to Go Only into #MM7 (Magnificently Manipulated 7) as we enter a US recession.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.60-5.05% (bullish)
UST 10yr Yield 4.45-4.97% (bullish)
UST 2yr Yield 4.85-5.15% (bullish)
High Yield (HYG) 71.90-74.41 (bearish)
SPX 4117-4438 (bearish)
NASDAQ 12,845-13,926 (bullish)
RUT 1 (bearish)
Tech (XLK) 164-182 (bullish)
Energy (XLE) 81.40-86.71 (bearish)
DAX 14,717-15,452 (bearish)
VIX 13.09-21.25 (bullish)
USD 104.85-106.96 (bullish)
EUR/USD 1.053-1.075 (bearish)
USD/YEN 149.93-152.33 (bullish)
GBP/USD 1.209-1.236 (bearish)
CAD/USD 0.719-0.732 (bearish)
Oil (WTI) 74.01-82.29 (bearish)
Oil (Brent) 78.29-86.11 (bearish)
Gold 1 (bullish)
Copper 3.55-3.70 (bearish)
Silver 22.00-23.22 (bearish)
MSFT 343-375 (bullish)
AAPL 170-188 (bullish)
TSLA 194-230 (bearish)
Bitcoin 34,406-38,083 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
