“Concentrate on what will produce results rather than on the results, the process rather than the prize.”
-Bill Walsh
What produces results in our Full Investing Cycle #process is being disciplined and patient. The #VASP (Volatility Adjusted Signaling Process) demands discipline (if TRADE and/or TRENDs break, reduce and/or get #out).
And seeing both economic and market cycles play out requires plenty of experience and patience.
What else would one of the best Coaches in American history tell you he needed as a “daily” reminder? “Exhibit an inner toughness emanating from four of the most effective survival tools a leader can possess: expertise, composure, patience, and common sense.” -Bill Walsh, The Score Takes Care Of Itself, pg 172
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where we’re concentrating on what’s producing results. That’s measuring and mapping The Signals of the Global Macro market alongside the economic Quads.
BREAKING: we’re 77 games (market days) into the 2024 season and INFLATION is pounding GROWTH.
No, I’m not doing “YTD.” I’m doing what I’ve always coached: Cycle To-Date. It just so happens that both the Global Industrial & Commodity Cycle bottomed in Q4 of 2023.
Full Investing Cycle Portfolios that positioned for #HFL (higher for longer on INFLATION) have been pounding the Old Wall 60/40 portfolios by being long of #HFL via US Dollars and Commodities, as an Asset Class.
Here’s how USD did vs. Global Currencies last week:
- US Dollar Index was +0.1% to +2.3% in the last month and remains Bullish TRADE and TREND
- EUR/USD bounced +0.4% but remains a Core Short = Bearish TRADE and TREND
- Japanese Yen was down another -1.1% vs. USD and remains an excellent Core Short as well
- GBP/USD was down -0.1% last week and also remains Bearish on both TRADE and TREND
- Brazilian Real was down -1.3% vs. USD to -3.7% in the last month = Bearish TRADE and TREND
- Philippines Peso was down -1.9% vs. USD last week to -3.0% in the last month = Bearish TREND
Why do we care about Brazil and the Philippines?
A) We’re short Brazilian Equities via EWZ (which has been a great short)
B) We got you #out of Philippines (EPHE) when it was breaking bad to Bearish TRADE and TREND
Who gets you #out?
A) I don’t know
B) I know WHEN we do
What you know is that a LOT of Wall Street investment products get you into certain Asset Allocations and portfolios. What you also know is they get paid their fees for that, no matter how those products perform …
And they almost NEVER get you out!
Who got you into Commodities in June of 2020, #out 2 years later, then back into Commodities in the last 3-4 months? We did. We were proud of those results last week too:
- CRB Commodities Index was +0.1% to +12.3% in the last 3 months
- CRB Foodstuffs Index inflated another +0.9% last week to +16.1% in the last 3 months
- Oil (WTI) finally corrected -2.9% last week to +13.9% in the last 3 months
- Copper inflated another +5.6% last week to +18.8% in the last 3 months
- Silver inflated +1.8% last week to +27.0% in the last 3 months
- Cocoa inflated +9.4% last week to +150.1% in the last 3 months
- Coffee inflated +3.2% last week to +25.2% in the last 3 months
I know, the Fed’s 785 “economists” and 23,000 employees are on it.
Why do we care about the last 3 months? Because that’s what a disciplined Full Cycle Investor should care most about: the intermediate-term @Hedgeye TREND duration of 3-months or more!
Instead, what if you’ve been long of what most “Retail Investors” have been bag-holding for the last 3 months?
A) Tech (XLK) was down -6.3% last week to -3.8% in the last 3 months
B) GS’s High Retail Sentiment Basket is down -8.9% in the last 3 months
C) The Terrible Twos (our AAPL and TSLA fundamental research Shorts) have been terrible
If you have friends who “can’t be long Gold”, that didn’t help them. It was one of our winners last week:
- Gold inflated another +2.0% last week to +17.8% in the last 3 months
- MLPs (AMLP) were +1.1% last week to +10.5% in the last 3 months
- Energy Stocks (XLE) were -1.2% last week to +18.5% in the last 3 months
Gold and MLPs were absolute week-over-week winners whereas Energy remains the TRENDING (3 months or more) relative US Equity (GICS Level 1) SECTOR STYLE winner.
In Global Equities, our Core Long India (INDA) Asset Allocation continues to be a relative winner as well. The BSE Sensex was -1.9% last week to +4.4% in the last 3 months vs. something big we got #out of like Japanese Equities which got smoked for a -6.2% loss last week to -3.1% in the last 3 months.
Yep, if you thought not getting out of QQQ was bad (we got you #out of that too), Japan’s been worse!
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 4.41-4.75% (bullish)
UST 2yr Yield 4.78-5.11% (bullish)
High Yield (HYG) 75.21-76.53 (bearish)
Investment Grade (LQD) 103.73-106.56 (bearish)
SPX 4 (bearish)
NASDAQ 15,190-16,013 (bearish)
RUT 1 (bearish)
Tech (XLK) 190-202 (bearish)
Insurance (IAK) 108.27-115.23 (bullish)
Nikkei 37,077-39,158 (bearish)
BSE Sensex (India) 72,101-75,094 (bullish)
VIX 14.84-20.58 (bullish)
USD 104.77-106.75 (bullish)
EUR/USD 1.055-1.077 (bearish)
USD/YEN 152.51-155.64 (bullish)
GBP/USD 1.231-1.258 (bearish)
Oil (WTI) 81.26-87.45 (bullish)
Gold 2 (bullish)
Copper 4.25-4.55 (bullish)
Silver (SLV) 27.56-29.01 (bullish)
AAPL 161-172 (bearish)
GOOGL 151-160 (bullish)
TSLA 129-162 (bearish)
Bitcoin 61,318-66,993 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
