“People don’t buy what you do; they buy why you do it.”
-Simon Sinek
Now that is a great leadership quote. No one is going to follow you or your #process unless they see you executing on it with discipline, passion, and pride.
Ryan Renteria used that quote to leadoff what’s one of the best chapters in his new #behavioral book Lead Without Burnout. I had the pleasure of having a Real Conversation with him at our Hedgeye Investing Summit yesterday.
I rarely “feel” burnt out. After a day like yesterday, I can’t wait to get up in the morning and see where all The Signals inside of The Game have reset. Other than hockey, there’s no better game on earth!
Back to the Global Macro Grind…
Now that we got the biggest Macro Tourist event day of the year out of the way, did you buy more INFLATION?
I did. What I didn’t do was buy what both consensus and I were choke full of (US Growth Exposures). As you could see via my daily pivots in our Portfolio Solutions product, I actually sold all of my QQQs yesterday.
On every other big down day since going bullish on SPMO in NOV of 2023 (post the AUG-OCT 2023 crashes and drawdowns in US Equities that some like to pretend didn’t happen), I’ve bought the damn dips.
This time I didn’t buy the dip in my US GROWTH exposures because it may not have been a dip!
Why? Well, as you know, there’s always going to be a multi-factor, multi-duration answer to that question. So let’s look at some of the big factors:
A) US GROWTH Factor Exposures are still RATE SENSITIVE
B) RATES ripped higher yesterday and confirming our Bullish @Hedgeye TREND Signals on Bond Yields
C) QQQ broke my immediate-term TRADE Signal Support Level; IWM broke TRADE and TREND Supports
I didn’t tell the macro market to do that. It just did that. So let’s get Signal Level specific here:
- 10YR: TRADE = 4.24%, TREND = 4.19%, so Bond Yields are signaling “Bullish TRADE and TREND”
- QQQ: TRADE = 440, TREND = 429, so QQQ “Broke TRADE and held TREND”
- IWM: TRADE = 206, TREND = 204, so IWM “Broke TRADE and TREND”
If you commit to being both disciplined and rules-based, making short-term Asset Allocation decisions gets a LOT easier. If you get all intellectual and emotional about it (bad #behavioral combo), The Game only gets harder.
Since we were already positioned profitably for the confirmation of my TRADE and TREND Signals in Bond Yields, there was nothing to do there other than decide how much TLT and IEF (Core Shorts) I was going to cover on red.
Did you know that this puts the US Equity Small Cap Index (Russell 2000) down -17.0% from its 2021 Cycle Peak? Did you know that a LOT of passive Old Wall 60/40 Portfolios have some blend of IWM and TLT as their Core Longs?
Yep, absolutely terrible, the 60/40 has been vs. our “Liquid Alts” Strategy of #GoAnywhere.
The big question many of you should have is “why sell ALL of your QQQ Asset Allocation if it didn’t break your intermediate-term TREND Signal Support Level?”
A) While Global Macro Markets are TRENDING towards Global #Quad2, USA has a MONTHLY #Quad4 for April
B) WHEN my TRADE Signal breaks and TREND is way lower, that’s the weakest Asset Allocation I hold
C) I have plenty of better INFLATION Asset Allocations that I can own in QQQ’s place
Live Example: I sold my QQQs and bought back an Asset Allocation to Uranium (URA).
Why? Other than The #VASP (Volatility Adjusted Signaling Process), you seriously shouldn’t care “why” I “like” uranium reducing greenhouse gas emissions, having medical applications, etc.
All my hard-earned capital really cares about is:
A) Does it work (i.e. back-test as a high probability bet) in Global #Quad2
B) Is it signaling Bullish on BOTH my TRADE and TREND durations
While a younger and “smarter” me wouldn’t have played The Game this way (I’d sometimes keep buying my losers and cut my winners too quick), the older and fatter me just sits on his winning horses and rides them.
Live Example (of what I did in Portfolio Solutions yesterday): Bought 50bps IAK, AMLP, EWG, WOOD, KEMX, GSG, INDA, EWN, CPER.
If consensus doesn’t own WOOD… and what consensus owns (QQQ) just broke immediate-term TRADE support, why would I allocate $1 dollar of my hard-earned capital to QQQ over WOOD?
As for the Fed and their muppets and mouthpieces, I have two words for them on measuring and mapping #Quad2 Inflation Accelerating: Get Better.
You guys just blew up plenty of Old Wall Retirement accounts that got Long Duration (TLT) on whatever “Golden Path” you thought you were on with inflation. Shame on you.
I don’t buy into what the Fed “feels” or does because I don’t have to buy into why they do it.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 4.39-4.67% (bullish)
UST 10yr Yield 4.24-4.60% (bullish)
UST 2yr Yield 4.60-5.01% (bullish)
High Yield (HYG) 76.30-77.16 (neutral)
Investment Grade (LQD) 105.76-107.52 (bearish)
SPX 5128-5270 (bullish)
NASDAQ 16,019-16,426 (bullish)
RUT 2009-2091 (bearish)
Tech (XLK) 202-209 (bullish)
Insurance (IAK) 112.90-118.14 (bullish)
S&P Momentum (SPMO) 78.74-80.86 (bullish)
BSE Sensex (India) 73,224-75,113 (bullish)
DAX 18,005-18,536 (bullish)
VIX 12.75-17.07 (neutral)
USD 103.75-105.57 (bullish)
Oil (WTI) 82.90-87.97 (bullish)
Gold 2 (bullish)
Copper 4.02-4.41 (bullish)
Silver (SLV) 25.67-29.15 (bullish)
AAPL 165-172 (bearish)
Bitcoin 65,914-72,475 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
