“We have to recognize the siren song of self-justification.”
-Carol Tavris
Actually, you don’t have to do anything. It takes zero experience and/or facts to “believe” whatever you want or need to believe. Personally, I believe that I need to understand that I’m human and that I just need to #GetBetter.
In a good #behavioral book I just finished, Mistakes Were Made (but not by me), Tavris and Elliot Aronson discuss our “cognitive dissonance, the hard-wired psychological mechanism that creates self-justification and protects our certainties, self-esteem, and tribal affiliations.”
Are you certain that the US is going to join reported #recessions in China, Germany, The UK, and now Japan, this morning? Both my #VASP Signals and US GDP Nowcasts are suggesting you shouldn’t be.
Back to the Global Macro Grind…
I am very certain that I will make many mistakes. I’m also confident that my research and risk management #process will save my hard-earned capital from crashing WHEN I’m making mistakes.
The entire architecture and design of my Full Investing Cycle #process is to NOT lose money WHEN either the crowd is losing theirs (2022) or when I am wrong.
You know that Bull Markets are born out of Bear Markets and reported recessions, right? Well, if you’re new to this, and you didn’t know that – now you know.
Here are some more important questions that every player who wants to play at the highest level of the Global Macro Game should know before entering a single buy or sell order:
A) Did you know that The Global Economic (GDP) Cycle peaked in Q4 of 2021?
B) Did you know that The Global Economic Cycle #slowed for 4 straight quarters in 2022?
C) Did you know that the USA #diverged, big time, from BIG countries that entered recessions in 2023?
Cool. And if you didn’t know all of that, now you know that too!
As you can see in today’s Chart of The Day, these are empirical and historical facts, not opinions. The way to read our proprietary bean-counting of Global Economic Reality is as follows:
A) On the far left column that has 4Q21, you see that both the USA and Mean/Mode of the G20 = #Quad2
B) Then you read from left to right and see the numbers go yellow and red = #Quad3 and #Quad4 Slowing
C) Then you see China and the Eurozone entering #Quad4 Recessions as the UK gets smoked with RED
You’ll also see the USA #diverge, big time, in 2023 as the Government opted to spend A) like it NEVER has before and B) HIRE like it NEVER has coming out of an economic slowdown (2022).
Oh, you didn’t know that The Big G in the US represented 1/3 of 2023’s GDP Growth and 24% of Non-Farm Payroll Gains? Now you know that too. Evidently the Germans and Brits didn’t do the uniquely American #MMT thing.
No matter what mistakes I made or didn’t make from The (Global) Cycle Peak in Q4 2021, it’s onto the #NextPlay.
For those of you who really like and/or need me to say the hardest three words for people who never make mistakes very publicly like I do: I WAS WRONG on the US entering a recession in 2023.
Our US Nowcast Model completely missed The Big USA G (Government Spending) ramp in Q1 of 2023 because the 30 Features in our proprietary GIP (Quads) Model didn’t stochastically measure and map that.
Our China, Eurozone, and UK Models nailed it from the 2021 Cycle Peaks. Our LONG India Nowcast Model nailed the economic #acceleration that still leads the G20 in Real Growth today.
To nail it or be nailed, remains The Question (from here)…
Let’s go back to our Global Macro Measuring & Mapping #process and read the map again:
A) We have China potentially bottoming here in Q1 of 2024
B) We have Germany and The UK potentially bottoming in 1H of 2024
C) We have the USA bottoming in 1H of 2024
Ex-China, which is #slowing to the lowest REAL Growth Rate they’ve had since entering the WTO (which they probably won’t print btw) alongside already REPORTED DEFLATION in their CPI, most stock markets:
A) Already either crashed from their 2021 Cycle Peaks … and
B) Have been recovering since
Yes, 2022 happened (in your accounts). You’re either still trying to get your hard-earned capital back to break-even (60/40s are way down)… or, like me, you’re already compounding returns to your all-time highs.
Double yes, I know. It makes some of you cringe to hear about my pile hitting all-time highs. But you like it when I say I WAS WRONG? That’s because that’s your bias. You’re human too, eh.
Fundamentals ≠ Risk Managed Positioning, I WAS WRONG on the US recession call. I was NOT WRONG on the #VASP led positioning.
What you don’t see on today’s map is our US GDP Nowcast for Q124 ticking up to +1.57% GDP and/or our headline INFLATION Nowcast ticking higher to 3.11% for Q2 of 2024.
But I see that. I see every successful signal and, of course, every #timstamped mistake in my accounts too.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 3.97-4.35% (bullish)
UST 2yr Yield 4.30-4.65% (bullish)
SPX 4 (bullish)
NASDAQ 15,430-16,045 (bullish)
RUT 1 (bearish)
Tech (XLK) 200-209 (bullish)
Insurance (IAK) 105.50-108.98 (bullish)
S&P Momentum (SPMO) 71.75-75.38 (bullish)
Healthcare (PINK) 28.66-30.12 (bullish)
Shanghai Comp 2 (bearish)
Nikkei 36,951-38,216 (bullish)
BSE Sensex (India) 71,030-72,456 (bullish)
DAX 16,825-17,081 (bullish)
VIX 12.79-15.86 (bearish)
USD 103.40-104.99 (bullish)
Oil (WTI) 72.30-79.27 (neutral)
Nat Gas 1.55-1.98 (bearish)
Gold 1 (neutral)
Copper 3.62-3.82 (bearish)
Uranium (URA) 28.40-32.11 (bullish)
MSFT 400-421 (bullish)
AAPL 180-188 (bearish)
NVDA 665-751 (bullish)
Bitcoin 45,606-53,807 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
