“There are worse things in life than death. Have you ever spent an evening with a salesman"
-Woody Allen
Yesterday, we said goodbye to our friend and teammate, Todd Jordan. As the title suggests, Todd was a gin man. In fact, during one of my first client dinners with Todd, I made the mistake of ordering a vodka martini. Todd immediately yelled across the table, “it isn’t a martini if it doesn’t have gin in it.”
I’m writing this Early Look less than 10 feet from Todd’s office. The light is on, almost like he was just there. Like he was every morning. Like he was a few Tuesdays ago, fresh off a Buffalo Bills Monday night loss to the Eagles. Being the great teammate I am, I wanted to make sure that Todd knew the Bills lost. I would hate for him to think that they won.
“Thanks man. You’re an a**hole. Let me suffer in peace.”
Those were the last words he ever said to me.
I’m going to miss that guy.
Back to the Global Macro Grind…
I’m on the sales team here at Hedgeye. I’m biased, but it has been a fascinating seat to sit in over the past 9 years. I’ve watched our company grow from the “hey, I saw you’re doing a short call on KMI – who the hell are you guys?” to a well established brand on Wall Street. I’ve been fortunate to work with some of the largest and most respected asset managers in the world.
The part that I love most about my seat is the unceasing barrage of queries that are constantly coming across our screens. Some of the smartest people in the world using every possible resource imaginable to gain the slightest edge in this complex, dynamic ecosystem that we call the market.
Our job is to give you that edge. No banking. No trading. Research only. If our research isn’t good, we don’t exist. Simple as that. And that, in essence, is my sales pitch. Our job is to digest the myriad of data that gets reported around the world and deliver a clear, succinct message aimed to help our clients manage risk. Simple, right?
The narratives are easy to discuss and often quite fascinating. Good news is bad. Bad news is good. Inflation is accelerating. Nope, decelerating. The Fed is going to cut. No they aren’t. They have to, right? No, they shouldn’t. Putin is still bombing Ukraine? Is the war in Gaza going to spread? Why are the Houthis attacking ships in the Red Sea? Is this the start of World War 3? They are leaving Trump off the ballot? Is that Democratic? Is there going to be a Civil War? I guess I should buy gold. But the Bitcoin halving could make me rich? Is this the Fourth Turning?
Narratives are fun, but not very helpful.
That is why I love my seat. Over the past six months, I’ve sat in countless institutional client meetings (and zoom calls) listening to folks try to get the bottom of one question: when are all of these cracks from the negative fundamental data actually going to cause this thing to collapse?
It would be easy to say things are good because the index is up YTD. That is not how the world works. Instead, focus on the vulnerability of lower earners with no savings with sharply elevated debt burdens, particularly in high-rate pockets such as unsecured revolving. Those burdens are piling up and those problems are not going away. As my colleague Drago recently wrote, “there are people that say the worst of credit is behind us and, based on how some of the card lenders have performed recently, one may think that. However, the data, and the sanity it lends us, does not seem to be turning that way.”
Where is that breaking point? I would point to our monthly Quad outlook. We continue to expect a period of meaningful weakness from December ’23 through April ’24. December = Quad 3. January & February = Quad 4. March & April = Quad 3.
These next five months are a period of acute weakness and slowing growth. Historically, these are the types of periods when we see things break.
Will that happen again?
I don’t know the answer. That’s why I’m in sales.
But I do know that it isn’t a martini if it doesn’t have gin in it.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.85-4.35% (bearish)
UST 10yr Yield 3.73-4.21% (bearish)
UST 2yr Yield 4.20-4.75% (bearish)
SPX 4 (bullish)
NASDAQ 14,344-15,125 (bullish)
RUT 1 (bearish)
Tech (XLK) 185-194 (bullish)
Utilities (XLU) 61.60-65.32 (bullish)
Shanghai Comp 2 (bearish)
Nikkei 32,262-33,608 (neutral)
BSE Sensex (India) 68,203-72,006 (bullish)
DAX 16,553-16,834 (bullish)
VIX 12.07-14.87 (bearish)
USD 101.24-103.77 (bearish)
Oil (WTI) 68.02-75.85 (bearish)
Gold 1 (bullish)
Uranium (URA) 28.05-29.99 (bullish)
Happy Holidays,
Peel
