“Only a crisis – actual or perceived – produces real change.”
-Milton Friedman
I’m old enough to remember the US Stock Market Crash/Crisis of 2022 and the US Regional Banking Crash/Crisis of 2023. Real changes to US Equity Index performance concentration (and chasing) were born out of both of those crises.
As Milton Friedman goes onto explain: “When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives…” -Milton Friendman, The Last Conservative
I’ve been at this for going on 24 years. I’ve seen plenty of Old Wall Street narratives “lying” (around). I’ve seen plenty of PMs chase performance, blow up, and go away. I’ve seen ghosts and, don’t tell anyone, but Full Investing Cycles too!
Back to the Global Macro Grind…
Got STPAD? Got “friends” in this business who do? Anyone who’s seen Cycles knows Wall Street loves talking about other people’s performance problems!
STPAD stands for Short-Term-Performance-Anxiety-Disorder.
Like most things we’ve built here for 15 years @Hedgeye, I made that up. Oh yeah. TRADEs, TRENDs, TAILs? I’ve got plenty of ideas lying around. Unlike people who chase performance, I have a risk management #process for STPAD too!
Let’s do some super-short-term STPAD:
A) Per Goldman’s Hedge Fund Performance Proxy (GSPRHVMS) hedgies were down -256 basis points yesterday
B) That made for the WORST 2-DAY performance period of 2023
Damn. What the heck? Well, when this happens:
A) GS “Most Rolling Short” Basket is up +6.2% and +1.8% on Friday and Monday alone… and
B) 2 of the most widely held stocks in human history (MSFT & NVDA) contributed -19% of down SPX, in a day
That’ll leave a STPAD mark!
As you can see in our Content Partner, Tier 1 Alpha’s, data/table here:
A) SPX was -0.54% on the day … but
B) MSFT -10.4% & NVDA -8.2% were -19% of that because they make up > 10% of SPX in terms of weight
Yes, if you’re #PayingAttention and reading what’s under MSFT & NVDA, you’ll see that AAPL + AMZN + GOOGL explained another -16% of SPX -0.54% because those 3 combined = 13% of the S&P500 (SPX).
You can keep reading down the table from there and you’ll see what I mean by Crashes/Crises producing “change.”
Obviously “everything is fine” if the Top 10 Stocks that generate all the “return” go up. But when the Top 10 equate to -46.5% of yesterday’s DOWN day, that’s not good!
Double obviously, these 7-10 Stocks are NOT the US economy. AAPL has guided to ZERO Growth, don’t forget.
So what to do WHEN everyone is forced to “own” the same things? Well, how about owning something else like:
- India’s Stock Market (up another +0.8% overnight to ATH)
- Nuclear and/or Uranium (NLR, URA, URNM were all pushing ATH’s yesterday too)
- Got any Gold? (at one point it hit an ATH too)
*ATH = All-time High.
I know. I know. WHEN I talk about how my LONG ONLY Account was flat to UP for all of yesterday, it drives the STPAD peeps bananas. But that’s ok. It doesn’t change that Moving Monkeys love bananas and/or that that’s what’s in my PA!
*For 100% transparency and accountability on my Long Only Positioning we produce that however you want to pay for it (daily, weekly, or monthly at different price points) in our new PORTFOLIO SOLUTIONS product.
And what if #MM7 (Magnificently Manipulated 7 Stocks) rallies off the LRRs today/tomorrow? Well, that would be cool, because I was buying-SOME XLG and SPMO yesterday (you can see that in my Long Only too).
Why?
A) Because I buy #Quad3 Longs like XLG (Large Cap Liquidity) at the LRR (LOW end of my Risk Ranges)… and
B) I’m not some rookie PM who doesn’t understand DIVERSIFICATION in a Full Investing Cycle Portfolio
That’s right, I’ll have no problem buying some Silver (SLV) and/or Platinum (PPLT) on sale today. I’ll have no problem selling-SOME of my Uranium or Indian Longs (INDA and SMIN) at the TRR’s (Top-end of my Risk Range™ Signals) either.
Despite my competitors and haters on the Old Wall hoping I have “performance problems” for “being bearish”, what I’ve done this year is A) evolve my Go Anywhere Asset Allocation #process… and
B) developed what Milton Friedman himself would smile at: alternatives to what’s crashing or in crisis.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.38-4.65% (bearish)
UST 10yr Yield 4.20-4.52% (bearish)
UST 2yr Yield 4.55-5.01% (bearish)
High Yield (HYG) 74.19-76.11 (bearish)
SPX 4 (bearish)
NASDAQ 14,104-14,327 (bullish)
RUT 1 (bearish)
Tech (XLK) 182-186 (bullish)
Energy (XLE) 82.98-85.20 (bearish)
Shanghai Comp 2 (bearish)
Nikkei 32,601-33,680 (neutral)
BSE Sensex (India) 65,998-69,397 (bullish)
DAX 15,740-16,475 (neutral)
VIX 12.31-15.76 (neutral)
USD 102.65-104.35 (neutral)
Oil (WTI) 72.54-78.01 (bearish)
Gold 2002-2103 (bullish)
Copper 3.70-3.91 (bearish)
Silver 23.14-26.34 (bullish)
Uranium (URA) 28.03-29.91 (bullish)
MSFT 367-383 (bullish)
AAPL 186-192 (bullish)
AMZN 143-149 (bullish)
META 317-333 (neutral)
GOOGL 127-134 (bearish)
NFLX 450-479 (bullish)
TSLA 228-249 (bearish)
NVDA 447-480 (neutral)
Bitcoin 37,691-42,590 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
