“Nobody ever thinks that something really bad is going to happen to them. Until it does.”
-Matthew Perry
Ever see the episodes of Friends where Ross, Joey, and Chandler are begging for Monica’s attention… and they all think they (individually) have it … and then…
Eventually, Chandler Bing got what he wanted. But that was just on a TV show. In real life, he got a “perforated bowel, aspiration pneumonia, and an ECMO machine.” -Friends, Lovers, and The Big Terrible Thing (pg. 12)
That’s what you get after you drink a handle of vodka (per day) and take 55 Vicodin (in a day). So how about taking a month-end-markup shot of fentanyl with an imminent Fed Rate CUT with a full-blown US recession (all “priced in”), in a day?
Back to the Global Macro Grind…
Everyone reading this gets the analogy. They should get the severity of the situation too. Modern day Wall Street was built on the fatally addictive drug of easy money. At EVERY sign of danger to their compensation structure, they want/need MORE RATE CUTS.
Does that mean they’ll get one imminently? What if they don’t this time? What if Main Street gets the full-blown RECESSION and the perforated bowels of US job losses that Wall Street would NEED to see to get PE Powell to give them their drugs?
A: They don’t know.
Addicts just know what they want/need. And while I personally have no idea how this will all end (other than not well), I’ll channel my deceased Canadian friend, Matthew Perry, one more time with one basic reality that he thought would be his future in 2022:
“I keep coming back to this singular, inescapable fact: I am alive.”
Yep, the November “rally” in US STAH-KKS is still alive! And there’s one more day to mark up those Perma Bull books before they hit Old Wall Street’s media with the next narrative on how 2/3 of Americans running out of money is going to be a good thing.
I’m old enough to remember TWO Novembers that many of my Old Wall Friends don’t like to talk about:
- NOVEMBER of 2007
- NOVEMBER of 2021
Those were both ROC (rate of change) economic tops and US Equity market cycle tops. I got “out” of both:
- I got out in NOV 2007 via ejection from my seat (Carlyle fired me for being “too bearish”)
- I got some of The People #out of Crypto, NASDAQ, Small Caps, etc. from this seat after NOV 2021
*When citing my track record of getting people #out of Asset Allocations, please use my Canadian accent
What happened after NOV 2007 is history. “No one could see” 2008 coming other than these Hedgeyes (in daily print at least). US STAH-KKS didn’t bottom, of course until Q1 of 2009. I went bullish in April of 2009.
What happened after NOV 2021 is also history. “No one could see” 2022’s US Stock Market Crash coming other than these Hedgeyes. Everyone who didn’t see it coming was begging for a FED RATE CUT by JUNE of 2022!
Oh, you remember that part of the real Full Investing Cycle movie, don’t you?
Yep. I do too. That’s when “Fed Fund Futures” (i.e. Old Wall bets on Fed Policy moves) started pricing in RATE CUTS… and that ended up being dead wrong, for a LONG time… mainly because they had HIGHER for LONGER on INFLATION wrong too.
We didn’t. We actually called the top in headline INFLATION in Q3 of 2022 and shorted Commodities, as an Asset Class, on that.
But for the peeps who only do 7-8 US Stock Charts and call that the economy, no worries. They missed that. Just like they seem to miss every major TRENDING Signal from FX, Commodities, and Bond Markets WHEN they matter most.
Yep. Going ALL CAPS on you AGAIN this morning. And in the famous words of The Coach (Herb Brooks): “AGAIN!”
Once AGAIN! No matter where you’ve been or what you think, here we are. And this is how my Hedgeyes are “seeing” it:
- UST 2yr Yield Risk Range™ Signal = 4.62-5.01% with Long-term TAIL Risk support = 4.41%
- UST 10yr Yield Risk Range™ Signal = 4.26-4.55% with Long-term TAIL Risk support = 3.98%
Since THE catalyst for something to go UP is that it went DOWN, what do you think happens if next week’s US Jobs report isn’t recessionary? Do you think 2s and 10s are going to get smoked EVERY day like they have as the DATA slowed in November?
You know that we have a MONTHLY #Quad2 for the US data (NOV Data) that will be reported in December, right? On the employment data that sequential acceleration is post UAW Strike, which should make simple sense to anyone who does ROC math.
What if Bond Yields bounce then Powell says what Bostic said yesterday (no one begging for RATE CUTS wanted to discuss that, but Bostic said there may be a need for another RATE HIKE!)???
Since I don’t do drugs (but I do drink vodka, just not a handle of it per day!), don’t expect me to believe what Wall Street needs/wants to believe this morning on RATE CUTS. If I had to do AI Matrix drugs, I’d choose the red pills.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.44-4.69% (bearish)
UST 10yr Yield 4.26-4.55% (bearish)
UST 2yr Yield 4.62-5.01% (bearish)
High Yield (HYG) 74.19-75.90 (bearish)
SPX 4 (bearish)
NASDAQ 13,858-14,356 (bullish)
RUT 1 (bearish)
Tech (XLK) 182-186 (bullish)
Energy (XLE) 83.20-85.68 (bearish)
Utilities (XLU) 61.30-63.22 (bullish)
Shanghai Comp 3007-3065 (bearish)
BSE Sensex (India) 65,316-67,111 (bullish)
VIX 12.46-15.97 (neutral)
USD 102.64-104.57 (neutral)
EUR/USD 1.083-1.101 (neutral)
Oil (WTI) 73.15-79.40 (bearish)
Gold 1 (bullish)
Copper 3.68-3.87 (bearish)
Silver 22.99-25.70 (bullish)
Bitcoin 36,617-38,258 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
