“The best way out is always through.”
-Robert Frost
That was the opening quote Matthew Perry chose for the book he finished writing in 2022: Friends, Lovers, and The Big Terrible Thing. He was found dead in his hot tub recently. #RIP, my Canadian friend…
Anyone who knew “Chandler” personally knew part of his story. While he’d often try hiding the drugs, he wasn’t hiding his addictions. As he wrote to open his #behavioral book, “My friends call me Matty. And I should be dead.”
Tying a book like this to The Cycle wasn’t what I was expecting to do this morning. Everyone who knows me knows my story too. God willing, I wake up with two feet on the floor each morning. I don’t know what I expect to write to you until I do.
Back to the Global Macro Grind…
Both the inevitability and gravity associated with economic cycles are what they are. They slow slowly, then all at once. There are plenty of causal factors that drive gravity. We’ve been seeing these #slowing data points since the end of Q3.
Now, with both Oil and Longer-term Bond Yields breaking down, #Quad4 Recession Signals are strengthening too.
No, that’s not what AAPL is “signaling.” As anyone who has had the mental flexibility to understand the difference between “fundamentals” and the FLOW of The Machine knows, those 2 things don’t always “have to be” in sync.
Like “AI”, for me it’s just easier to A) see and B) say than to “understand.” AAPL guided Q4 of 2023 to the same ROC (Rate of Change) realities we see being reported within The Cycle’s data – i.e. ZERO Growth.
To be fair, we have US GDP at ZERO point four percent (+0.44%) Real Growth in Q4! Here are our Recession Nowcasts:
A) Q1 of 2024 we’re at -1.25% q/q SAAR GDP with +3.22% y/y headline INFLATION (CPI)
B) Q2 of 2024 we’re at -1.61% q/q SAAR GDP with +3.29% y/y headline INFLATION (CPI)
And, while AAPL may be delivering ZERO Growth heading into those back-to-back NEGATIVE quarters of US GDP (i.e. a reported recession), Wall Street is expecting quite the opposite from NVDA when they report tonight!
Heading into the NVDA Q3 print, Tech’s Top 3 in the Tech (XLK) ETF (AAPL, MSFT, NVDA) drove +30% of yesterday’s SP500 (SPY) daily return. It was the 19th #MarkupMonday in the last 20 weeks.
I know, no #MOAB (Mother of All Bubbles) and/or market manipulation to see here.
My critics don’t like the words bubble or manipulation. That’s fine. I don’t like all the words they use to describe The Cycle either. Regardless, Tech (XLK) continues to signal Bullish TREND @Hedgeye and so do 7 of the 8 #BubbleCaps.
I’ll be the first to let you know WHEN they don’t. I’m old enough to remember when NVDA broke TREND in SEP 2023, btw. It proceeded to collapse to 403 by OCT 2023. It closed at a new all-time high of 504 yesterday. All good.
Unlike AAPL, fundamentally, both we and the world are expecting an epic NVDA ROC REVENUE #acceleration tonight. If they don’t print that REVENUE #acceleration, I will revert to recommending prayer for whoever was chasing yesterday.
My friends call me Mucker. I don’t do drugs. And I don’t chase.
What I do is measure and map ALL of Global Macro’s market signals so that I don’t get sucked into other people’s narratives. What’s as clear as the sun rising in the East this morning? A: Major #Quad4 Recession Signals Strengthening:
A) Oil (WTI) is down another -1.0% this morning after failing at both my TRADE and TREND Signal Levels
B) UST 10yr Bond Yield is down (again) at 4.41% with prior TRADE support now resistance and TREND in play
C) Gold is up another +0.4% and continues to signal Bullish on both my TRADE and TREND durations
What’s the back-test on that Trifecta? What does it mean when Oil Demand is slowing at a faster pace and Bond Yields are breaking down as Gold breaks out? A: recession.
What’s making the UST 10yr Yield Signal Strengthen is that European 10yr Yield Signals had A) already strengthened as both the UK and Europe confirmed #Quad4 Recessions in Q3 and B) USA enters recession on a lag to theirs.
For that to change, UK and German 10yr Yields would have to trade back above their intermediate-term TREND resistance levels of 4.39% and 2.71%, respectively. In the meantime, the best way to “see” their recessions is always through.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.52-4.81% (neutral)
UST 10yr Yield 4.35-4.69% (neutral)
UST 2yr Yield 4.80-5.09% (bullish)
High Yield (HYG) 73.50-75.05 (bearish)
SPX 4 (bearish)
NASDAQ 13,445-14,434 (bullish)
RUT 1 (bearish)
Tech (XLK) 174-187 (bullish)
Energy (XLE) 82.00-85.71 (bearish)
Utilities (XLU) 59.27-63.29 (bullish)
Shanghai Comp 3015-3083 (bearish)
BSE Sensex (India) 64,405-66,199 (bullish)
VIX 13.25-17.36 (bullish)
USD 102.90-106.34 (bullish)
EUR/USD 1.059-1.097 (neutral)
Oil (WTI) 72.94-79.83 (bearish)
Gold 1 (bullish)
Copper 3.57-3.85 (bearish)
MSFT 357-381 (bullish)
AAPL 181-193 (bullish)
AMZN 140-148 (bullish)
META 319-344 (bullish)
GOOGL 129-138 (bullish)
NFLX 429-481 (bullish)
TSLA 207-250 (bearish)
NVDA 451-515 (bullish)
Bitcoin 35,390-38,352 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
