“Everyone decided to get 4 inches better.”
-Andy Reid
That’s what the 2024 Super Bowl Champ’s Head Coach had to say the last time the Kansas City Chiefs went from #Quad4 to #Quad1 on the San Francisco 49ers, coming back from a 10-point deficit to win the Super Bowl in 2020.
“In 2019 in the Super Bowl against my New England Patriots, it appeared that the Chiefs had won the game when they intercepted a desperate pass from Tom Brady. But there was a yellow penalty flag on the ground. A Chiefs defender named Dee Ford had set up in an illegal formation – by four inches.” -The Right Call, pg 148
While we don’t think about our Full Investing Cycle success on a “YTD” basis, my Macro team went from having a championship season in 2022 to a #NotGood one in parts of 2023. We learned from our mistakes, however, and made some great Global Asset Allocation Pivots in September-December of 2023. We decided to #GetBetter.
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where 4:35AM ET came early after watching The Game!
As always, the grind of the #process goes on. Let’s start with reviewing the Global Currency market from last week:
- Our Long US Dollar Asset Allocation was up for the 6th straight week = Bullish TRADE and TREND
- US Dollar Index was up another +0.2% last week to +1.5% in the last month
- EUR/USD was down -0.1% and remains Bearish on both our TRADE and TREND durations
- Japanese Yen was down another -0.7% vs. USD and remains Bearish TRADE and TREND
- GBP/USD was -0.2%, breaking @Hedgeye TRADE support and is back to Neutral TREND
- Thai Baht was down -1.8% vs. USD to -2.6% in the last month and remains Bearish TRADE and TREND
After watching Mahomes lead the Chiefs to back-to-back Super Bowl wins, you’re not chowing down on some Thai Baht analysis already this morning? What’s wrong with you? #GetBetter! Lol.
Baht’s actually matter to me. When I said we made some great Global Asset Allocation Pivots, some of the lazier SPY Monkeys were probably triggered. I’m talking about pivoting to Long Philippines (EPHE) instead of Long Thailand (THD).
While it may not be how a 1-dimensional player in The Game thinks about it, as you know, I don’t care how they choose to play The Game. The Philippine Peso is +0.2% vs. USD in the last month and EPHE was +2.1% for us last week.
In addition to Long Philippines, at the Country (Equity) Asset Allocation Level we’re also still LONG:
A) Dutch Stocks via EWN (Netherlands stock market was up another +3.6% for us last week)
B) Swedish Stocks via EWD (which we added to on red last week with the market correcting -0.1%)
And, of course, India’s Stock market via both INDA and SMIN. India’s mainline BSE Sensex Index was up another +0.5% for our Go Anywhere and Diversified Asset Allocation #process, taking its trending 3-month return to +16.3%.
How about Commodities? We’re underweight and/or Net Short that Asset Class in narrow #Quad4 and/or #Quad1:
- CRB Commodities Index was +2.5% last week to 274 which is TREND resistance
- Oil (WTI) reflated +6.3% last week breaking out on our TRADE duration but remains Bearish TREND
- Copper dis-inflated -3.7% last week and remains Bearish on both our TRADE and TREND Signals
- Corn deflated another -3.1% last week to -8.3% in the last 3-months and remains a Core Short
- Cocoa inflated another +11.8% last week, taking its trending 3-month inflation to +41.0%!
Yep, there’s something for everyone in Commodities right now. Fortunately, my #VASP (Volatility Adjusted Signaling Process) didn’t have me Short of either Oil or Cocoa last week. We’re still Short of CORN, WEAT, and HYDR though.
What would I do if the CRB Commodities Index and/or Oil breaks out on my intermediate-term TREND duration ahead of our MONTHLY Quads re-accelerating to back-to-back #Quad2’s in May and June?
A: Get Long of both!
I have absolutely zero concern with what I did/said about the economy or markets yesterday. While I try to learn from every success and mistake, my only practical concern (with my hard-earned capital) is making the #NextPlay.
In US Equities, our mainline US Sector Asset Allocations continue to work. They wouldn’t be if my #VASP didn’t get me #out of something like Utilities (XLU) btw:
A) Utilities (XLU) were down another -2.0% last week to -6.5% in the last month alone
B) Healthcare (XLV) was up another +1.4% last week to +2.6% in the last month
We remain Long of US Healthcare via PINK and PJP. If you have Old Wall friends who think I’m short their beloved SPY Monkey, tell them A) “he’s not” and B) he has us Long S&P Momentum (SPMO) since NOV 31, 2023.
As power-users of the Full Investing Cycle #process know, in terms of US Equity Exposures, we’re also Long Insurance (via IAK and KBWP), Large Cap Growth (XLG), S&P Low Volatility (SPLV), Cannabis (MSOS and WEED), Housing (ITB), MLPs (AMLP), and US Equity Preferreds (PFF).
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 3.88-4.25% (bearish)
UST 2yr Yield 4.20-4.54% (bearish)
High Yield (HYG) 76.81-77.65 (bullish)
SPX 4 (bullish)
NASDAQ 15,334-16,057 (bullish)
RUT 1 (bearish)
Tech (XLK) 198-210 (bullish)
Insurance (IAK) 105.26-108.28 (bullish)
S&P Momentum (SPMO) 70.48-75.72 (bullish)
Healthcare (PINK) 28.35-30.12 (bullish)
BSE Sensex (India) 71,017-72,514 (bullish)
VIX 12.07-14.34 (bearish)
USD 102.98-104.83 (bullish)
EUR/USD 1.071-1.085 (bearish)
USD/YEN 146.43-150.22 (bullish)
GBP/USD 1.251-1.273 (neutral)
Oil (WTI) 71.01-77.99 (bearish)
Gold 2011-2075 (bullish)
Copper 3.61-3.80 (bearish)
Uranium (URA) 29.25-32.34 (bullish)
MSFT 405-425 (bullish)
AAPL 183-191 (bearish)
NVDA 662-743 (bullish)
Bitcoin 44,101-49,998 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
