“What makes the seat worth coveting is its unpurchaseable proximity to greatness in practice…”
-Sally Jenkins
That’s what Sally Jenkins had to say about taking it all in from the sportswriter’s seat. She calls it “the best in the house” … and that she’s “not fool enough to waste” the opportunity to watch the practice of the best pros. “I take notes.”
These are quotes from page 1 of the prologue to a timely and topical #behavioral book that a client sent me titled The Right Call: What Sports Teach Us About Work And Life:
“To witness the clutch shot, the winning throw, or the final strike is just a fractional part of the job. Most of your time is spent at practice, watching the alchemical processes by which coaches and athletes find the right action in the moment.” -Jenkins
Back to the Global Macro Grind…
Are you focused on making the “right calls” or having the right process?
I’m obviously (and constantly) focused on my #process. While making some good or bad “calls” is what many amateurs (and some pros) want/need to reduce the job to, that’s not my job.
My job is to not only play The Game out loud, but coach it, across the Full Investing Cycle. The years of reps and learnings it takes to step up to the keyboard to write this every morning is material.
The best part: The Game is always changing and only those who evolve their game will survive its daily grind.
What’s most interesting about The Game today (and I quite literally mean today) is that sometimes you have to slow your game down in order to play it faster.
What do I mean by that? Here’s the most basic of examples:
- It’s a big Macro Tourist day (ever since the Street had CPI wrong the way up and down, it’s all about CPI!)
- So we’ll have the equivalent of the sportswriters (Old Wall Journos) playing alongside all the pros
- And the pros who are running Institutional Money have never been forced to be this short-term, ever
How short-term is short-term these days?
A) 1-3 days
B) Not 1-3 quarters out
As you can see in our Content Partner Tier1Alpha’s Chart of The Day (first slide in their data pack this morning):
A) Short-dated Equity Vol Term Structure vs. Economic events just spiked up, BIG TIME, up to 15.24
B) That’s 15.24 for super-short-term SPX IMPLIED VOLATILITY and on Thursday of last week that was at 11!
If you don’t measure and map this daily, specifically, and deliberately across durations, you’re not going to notice it. But that’s ok. That’s why you pay my teammates and I to do it and/or to coach you through WHERE to find it yourself.
Again, this isn’t about “making a call” on CPI. This is all about understanding how expectations are PRICED into the print and how the FLOW of epic #MOAB (Mother of All Bubbles) US Options activity affects intraday Gamma, Consensus Positioning, etc.
Since it’s super-short-term, it generally has nothing to do with where The Cycle is going to be 1-3 quarters out.
So what did I do when I saw that short-term pop in consensus BUYING PROTECTION ahead of CPI?
A) I stopped doing what I’d have done in the past (shorting US Equities on green)
B) I play faster in this short-term OODA Loop of expectations by deciding to not play at all
If you’ve ever counted cards at a blackjack table successfully, you get the drill. Backing away from making incremental bets is indeed a bet. You need to be able to count fast to decide to not play. Then you need to read and react to the next play.
I’ve been playing The Game on Wall Street for going on 24 years, and it’s never been faster.
It’s never been shorter-term.
It’s never been louder (And I mean LOUD, as in I have to play against not only the other Institutional desk teams but ALL of their HODL and YOLO Only fans who are right down there with us on the field making 0DTE bets!).
*0DTE = Zero Days To Expiration Options
Faster? By definition, since almost 55% of DAILY options trading is in options that expire within 7 hours of trading, The Game has never been faster. It’s also never been more prone to an epic short-term crash, as a result.
Oh boy, so how do you NOT “hedge” and/or sell into one of those? A: sometimes I do, sometimes I don’t.
Yesterday, I didn’t. Maybe I will AFTER the crowd reacts to another Macro Tourist day today. All the while, we know that Institutional Investors have never been this naked (portfolios NOT protected) 1-3 quarters out, heading into a recession.
Now that last part (our US Recession Nowcast for Q1 and Q2 of 2023) isn’t on the radar of the dude with a tub of popcorn thinking he’s playing #FF Defensive Tackle for the Dolphins last night, so I don’t expect him to think about that in-game today…
But that certainly doesn’t mean that the conditional probability of US Recession Risk isn’t rising as the Game Clock winds down on December of 2023. I’ll be hosting a call with Options/Flow Guru Mike Green and my Hedge Fund man Mike T (Taylor) LIVE at 11AM ET today on @HedgeyeTV if you’d like to hear a Real Conversation on this topic at the pro-to-pro level.
I don’t just write about The Game. I play it with all my hard-earned capital. Every rep counts.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.15-4.55% (bearish)
UST 10yr Yield 4.08-4.39% (bearish)
UST 2yr Yield 4.56-4.85% (bearish)
High Yield (HYG) 74.76-76.18 (bearish)
SPX 4 (neutral)
NASDAQ 14,052-14,493 (bullish)
RUT 1 (bearish)
Tech (XLK) 182-189 (bullish)
Energy (XLE) 80.65-84.27 (bearish)
Utilities (XLU) 62.01-64.23 (bullish)
Shanghai Comp 2 (bearish)
BSE Sensex (India) 67,113-71,054 (bullish)
VIX 12.27-15.31 (neutral)
USD 103.04-104.55 (bullish)
GBP/USD 1.250-1.274 (bullish)
CAD/USD 0.733-0.741 (neutral)
Oil (WTI) 67.22-75.85 (bearish)
Nat Gas 2.37-2.86 (bearish)
Gold 1 (bullish)
Silver 22.57-26.37 (neutral)
Uranium (URA) 27.89-29.55 (bullish)
Bitcoin 40,692-45,303 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
