“Character doesn’t set like plaster – it retains its plasticity.”
-Adam Grant
That was a good rebuttal of the Old Wall Econ equivalent school of Psychology (from the 1800s) of William James that believed that “by the age of thirty, your character has set like plaster and will never soften again.”
Like now, way back then it required zero knowledge to believe someone’s opinion. In chapter 1 of Hidden Potential (titled “Skills Of Character – Getting Better At Getting Better”), Grant goes on to explain:
“Character is often confused with personality, but they’re not the same. Personality is your predisposition – how you think, feel, and act. Character is your capacity to prioritize your values over your instincts.” (pg 20)
Back to the Global Macro Grind…
Are you going to prioritize #VASP Signals and The ROC (rate of change) of the INFLATION data this morning, or are you going to go with your personal thoughts and “feelings” on these matters?
I choose to not believe myself.
That’s right. I’m not thirty. I’m almost fifty! And I choose to read as much as I can to #GetBetter at getting better. The #1 area of development for me isn’t Fractal Math and Stochastic Modeling – it’s #behavioral.
I choose to fade my feelings.
Even though some of us worked for most of the day yesterday, today is the “start of the work week” in America and markets are open to trade. Let’s start with what the Global Currency market is signaling:
- US Dollar Index was up for the 7th STRAIGHT week and remains Bullish TRADE and TREND
- EUR/USD (now a Core Short) was down -0.1% last week and remains Bearish TRADE and TREND
- Yen was down another -0.6% vs. USD last week to -2.2% in the last month as Japan #slows
- GBP/USD was down -0.4% last week after Breaking Bad from Bullish to Bearish TREND @Hedgeye
- Russia Ruble was down another -1.6% last week to -4.8% in the last month alone = Bearish TREND
Imagine you don’t have what’s left of your American Liberties… and you live in Russia… and you get paid in Rubles. In real-world Purchasing Power terms, would you “feel” like INFLATION is accelerating or decelerating?
Inflation might “feel” a certain way to The People (and I empathize with that real-world reality), but for Full Cycle Investors like you and I, it’s not what you “think” – it’s either accelerating or decelerating. Period.
That’s why we measure and map Commodity Prices, daily, weekly, and monthly. That’s the way to mathematically define The ROC (rate of change) across our TRADE, TREND, and TAIL durations:
- Oil (WTI) INFLATED another +3.1% last week to +9.2% in the last month and is back to Bullish TREND
- Dr. Copper was up +4.3% last week, breaking out on my TRADE duration and testing TREND resistance
- Corn deflated another -2.9% last week taking its TRENDING (3-month) deflation to -12.3%
Since we’re still short Corn and Wheat in CORN and WEAT terms, that’s cool with us. It’s not cool with American Farmers and/or the “Farmer Jim’s” of the world who are long Deere (DE) on “valuation.”
*If you’d like to see Jay Van Sciver’s Short Deere (DE) report, ping . He had the LOW on EPS estimate on your Bloomberg machine prior to the company reporting The Cycle last week.
We’re no longer short of either Oil or Energy Stocks. Both are signaling Bullish TRADE and TREND and that’s how I choose not to believe anything but what my #VASP (Volatility Adjusted Signaling Process) believes.
In other real-world INFLATION #accelerating news:
A) Bacon (Lean Hogs, eh) inflated another +5.0% last week to +19.2% in the last 3 months
B) Cotton inflated another +2.4% last week to +16.7% in the last 3 months
And Long Energy and MLP Stocks led US Equity Sector Style gainers last week (with SPY -0.4%):
A) Large Cap Energy (XLE) was +2.7% on the week to +6.0% in the last month
B) MLPs (we have a Core Asset Allocation to AMLP) were up +3.7% on the week
Oh, you have Old Wall friends who are still DOWN double-digits in their 60/40 Retirement Accounts since the Global Economic Cycle peaked in Q4 of 2021?
That sucks. Tell them to subscribe to Portfolio Solutions by the fine folks at Hedgeye where we have plenty of Asset Allocations that have helped preserve & protect The Pile like:
- Long Insurance Stocks (IAK and KBWP)
- Long Shipping (BDRY)
- Long Healthcare (PINK and PJP)
You see (yes, 60/40 and “Target Date” types can see these realities in their accounts), the Ole Wall’s 60/40 thing doesn’t work when INFLATION sticks and/or is HIGHER FOR LONGER because:
A) Bond Yields stop going down… and
B) Then Bond Yields go up, again!
In case they missed my #VASP Signals on this, Bond Yields broke out to Bullish TRADE and TREND again:
A) UST 2yr Yield was up +19 basis points last week and is back to Bullish TRADE and TREND
B) UST 10yr Yield was up +12 basis points last week and is back to Bullish TRADE and TREND
This, of course, came on the heels of a “hotter than expected PPI” report. Whoever was “expecting” softer than expected Producer Prices (PPI) obviously does the thinking and “feeling” thing…
Because anyone who’s measuring and mapping prices can read what I just reviewed this morning.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.26-4.52% (bullish)
UST 10yr Yield 4.02-4.38% (bullish)
UST 2yr Yield 4.35-4.70% (bullish)
SPX 4 (bullish)
NASDAQ 15,519-16,050 (bullish)
RUT 1 (bullish)
Tech (XLK) 200-208 (bullish)
Insurance (IAK) 106.11-110.91 (bullish)
S&P Momentum (SPMO) 72.36-75.83 (bullish)
Healthcare (PINK) 29.03-30.23 (bullish)
BSE Sensex (India) 71,084-72,941 (bullish)
VIX 12.55-15.84 (bullish)
USD 103.61-104.91 (bullish)
EUR/USD 1.070-1.082 (bearish)
USD/YEN 148.43-151.12 (bullish)
GBP/USD 1.255-1.266 (bearish)
Oil (WTI) 73.22-79.90 (bullish)
Oil (Brent) 78.55-84.98 (bullish)
Gold 1 (neutral)
Copper 3.63-3.86 (neutral)
AAPL 180-188 (bearish)
NVDA 679-751 (bullish)
Bitcoin 49,016-53,446 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
