“Putting in the work has always meant repetitions.”
-Arnold Schwarzenegger
How many people put in the real work? On Single Stocks and company “stories”, I’d say a lot. On real-time Global Macro Economic & Market analysis, not many do. Or at least they don’t do the work with disciplined and deliberate study (as I define it) consistently.
Ah-nold’s definition of doing the work is much closer to mine than the Old Wall’s. “Reps, reps, reps… not just doing the reps, but tracking them. At the local weight-lifting club in Graz, I’d write my entire workout on the chalkboard, down to the number of sets and number of reps, and I wouldn’t let myself leave until I’d mark them all off.” -Be Useful (pg 81-82)
What are your morning reps? “The key is they have to be good reps. Not lazy, distracted, arch-back, noodle-arm bullshit reps.”
Back to the Global Macro Grind…
My first 1.5 hours of morning reps doesn’t start at 4:30AM ET. It starts at 6PM ET, every night. That’s when all of my post US close analysis starts. Think of it for what it is, Phase 1 of filling in page 1 of my notebook (every market day has 2 pages to fill).
By 9PM, depending on what’s going on in my life, with the help of my Macro Teammates I’m proactively prepared to execute on Phase 2 (the morning part of the process). And I don’t just do it when “something is going on” that the whole Street’s Tourists think they see…
I do it EVERY day, always looking for the next update on what in PARTICULAR is signaling at particular points in Cycle Time.
So let’s not waste any of our precious Life & Cycle Time on how the 1st part of this morning’s Early Look makes other people “feel” about their process and/or my style, hair, or current weight – let’s just get to this morning’s Global Recession Update:
A) The Global Currency Market is signaling A) no Fed Cut (pending) and B) a pending US Recession
B) The Global Sovereign Bond Market (ex-India) continues to signal recession
C) The Global Oil & Energy Market continues to crash and signal recession (in demand)
Is that not enough? Well as long as 10 US stocks offset the 409 in the SP500 that were down yesterday, all good?
No, that’s just Old Wall lazy arch-back-noodle-arm-bs and/or seeking a “YTD” compensation number based on a return that reflects nothing about either the non-calendar-year Full Investing Cycle or the pending “return” on a myopically focused “stocks only” portfolio.
If you really want/need to look at the returns of the US Stock Market look at the Chart of The Day from Tier 1 Alpha:
A) It shows the return of the Equal Weight SP500 (RSP) vs. #MM7 (Magnificently Manipulated 7)
B) Equal Weight (RSP) was down -0.9% yesterday vs. SPY -0.1%
C) Russell 2000 was down -1.4%, taking its drawdown since July 2023 back to -7.1%
The Russell 2000 also remains in Full Investing Cycle Crash Mode, crashing -24.0% from its NOV 2021 Cycle Peak.
Enough about US Stocks, concentration of a “YTD Return” that ignores the 2022 “return”, etc., let’s go back to doing the reps:
- Is China in an expansion or a recession?
- Is Europe in an expansion or a recession?
- Is the US Industrial & Manufacturing economy in an expansion or a recession?
The answer to all 3 of those major Global Macro Economic ROC (rate of change) questions isn’t subject to debate: they are all in REPORTED RECESSIONS. That’s why the Chinese are panicking. It’s also why European Bond Yields are crashing.
Q for Perma Bulls who need to “land softly”: If the Consumption & Services side of the US economy isn’t readying to enter a reported recession in 1H of 2024, then why is Wall Street betting on multiple Rate Cuts by the end of Q1 of 2024?
More questions on the US Consumption Economy:
- If demand isn’t going to slow faster from DEC to FEB, why is Oil crashing to new #Quad4 (in JAN/FEB) Cycle Lows?
- Why is the Long-end of the UST Bond Market (10yr and 30yr Yield) collapsing to lower-highs and lower-lows?
- Why is our Core Asset Allocation to Gold breaking out to ALL-TIME highs?
Again, if the ROC (rate of change) of Real Growth was accelerating in China or the USA, I would be long of Chinese Equities and/or the Russell 2000. I am long of India (INDA and SMIN) which, like Gold, is hitting ALL-TIME highs for that very reason.
Obviously in this day and age of societal rage, anyone can say and/or believe anything. But just “believing” in something doesn’t mean it’s true. Personally, I believe in things like ROC math and the economic gravity of Cycles. Why? Because they cycle.
If and when the US Recession data starts to “bottom” in ROC terms (highest probability for that is sometime in Q2-Q3 of 2024), I’ll be objectively and deliberately depicting the data and market signals the same way I just did if it’s indeed going the other way.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.30-4.61% (bearish)
UST 10yr Yield 4.15-4.52% (bearish)
UST 2yr Yield 4.55-5.00% (bearish)
High Yield (HYG) 74.25-76.14 (bearish)
SPX 4 (bearish)
NASDAQ 14,108-14,324 (bullish)
RUT 1 (bearish)
Tech (XLK) 182-186 (bullish)
Energy (XLE) 82.40-85.05 (bearish)
Shanghai Comp 2 (bearish)
BSE Sensex (India) 66,207-69,799 (bullish)
VIX 12.33-15.69 (neutral)
USD 102.66-104.38 (neutral)
Oil (WTI) 71.36-77.51 (bearish)
Gold 2005-2105 (bullish)
Copper 3.70-3.91 (bearish)
Silver 23.45-26.29 (bullish)
Uranium (URA) 28.04-29.73 (bullish)
Bitcoin 38,603-45,223 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
