“I will here attempt to give a brief, but I fear imperfect, sketch of the progress of opinion on the Origin Of Species.”
-Charles Darwin
On the origins of breakouts in Global Demand & Inflation, I will here attempt to give a brief, but I fear non-narrative laden, explanation of TRENDING prices.
Especially on Wall Street, many humans need/want narratives. Every price breakdown/breakout must be explained by something other than, in today’s case, the Global Economic Cycle itself.
While the origin of this type of behavior is unknown, that’s ok. As Peter Frankopan reminded me in a good #history book I’m reading, The Earth Transformed, “the origin of Homo Sapiens is something of a mystery, as well as a matter of considerable debate. The human lineage diverged from that of apes around 7 million years ago.” (pg 41)
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye where we’ve already measured and mapped the Global Economy in both Global Macro SIGNAL terms and the ROC of Global GROWTH and INFLATION data.
Let’s start with the Global Currency Market:
- US Dollar Index corrected -0.8% within its Bullish @Hedgeye TREND last week
- EUR/USD was +1.0% and recaptured Bullish TRADE momentum (and is now Neutral TREND)
- Japanese Yen was +0.3% vs. USD last week and remains Bearish on both TRADE and TREND durations
- GBP/USD was +1.5% and also recaptured Bullish TRADE, but remains Bearish TREND
- Canadian Dollar was +0.5% vs. USD last week and remains Bearish on both TRADE and TREND durations
- Chilean Peso was +4.0% vs. USD last week taking its Bullish TRENDING 3-month return to +9.0
Why do you care about this monster move in the Chilean Peso this morning? A: because Chile is the world's largest producer of Copper. And The Doctor is INFLATING big time alongside big things like Chinese Demand.
Did you want/need that narrative?
Or do you need a Global Macro risk management #process that SIGNALS breakouts in market prices before your biased “news” world finds the economic narrative?
While China reporting a big #acceleration of +7% year-over-year Industrial Production GROWTH was big “news” to Macro Tourists on Friday, it wasn’t to #HedgeyeNation.
How about that Commodity Metals INFLATION (in your Full Investing Cycle portfolios) last week?
A) Dr. Copper (long CPER and COPX) inflated +8.3% last week alone, taking its 3-month TREND to +31.6%
B) Silver (long SLV) inflated even more than Copper, +9.7% last week to +33.2% in the last 3 months
C) Nickel (long NIKL) inflated another +3.2% last week, taking its 3-month TREND to +19.9%
It wasn’t just the Metals we own that were inflating – it was other big things The People must pay for:
A) Oil (WTI) inflated +2.3% last week after holding Bullish @Hedgeye TREND support
B) Cattle prices inflated +8.8% on the week alone
C) Orange Juice inflation went vertical, +13.8% last week
But, don’t worry, the “CPI was benign”… LOL
While that’s the INFLATION narrative that some on Wall Street want/need, what we have is #HFL (higher for longer) on INFLATION with a very much misunderstood Global Demand Acceleration component to the Global Cycle.
I have no idea how all these “Core PCE” experts have conviction in their “benign” or falling inflation forecasts without having a view of what India’s economy growing at +8% REAL GDP alongside both China and Europe #accelerating does to their linear forecasts.
And you know what? Newsflash: I don’t read or care about what they think.
There are barely enough hours in a day/week for me to measure and map the entire Global Economy and her markets alongside a big Macro research team, never mind wasting time to read their USA Only narratives.
How about those Global Equity Market returns in your #GoAnywhere Portfolios?
A) India (long INDA and SMIN) had a big +2.6% week and we’ve been long that since June of 2023
B) Germany (long EWG) corrected -0.4% after making a new ATH (all-time high)
C) Spain (long EWP) inflated another +2.0% last week, taking its 3-month TREND to +14.6%!
If they need to know “why” on Spain? This morning Spain reported another #acceleration in Spanish Consumer Confidence to 84 vs. 82 last month.
Spain, of course, isn’t just “up” because of that. Spain, Germany, the Netherlands (EWN is +18% since we added it to our Asset Allocation Model and Portfolio Solutions in the first week of January 2024), etc. are #accelerating from their recessionary Cycle Lows of 2023.
Finally, one of the best Global Macro SIGNALS on either Global #Quad2 or #Quad3 INFLATION #accelerating (Gold) inflated another +2.3% last week, taking its 3-month TREND to +19.9%, and it’s hitting a new all-time high today.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 4.35-4.58% (bullish)
UST 2yr Yield 4.75-4.92% (bullish)
SPX 5174-5336 (bullish)
NASDAQ 16,204-16,824 (bullish)
RUT 2042-2118 (bullish)
Tech (XLK) 204-215 (bullish)
Insurance (IAK) 114.61-118.01 (bullish)
Energy (XLE) 92.64-95.74 (bullish)
Basic Materials (XLB) 90.53-93.06 (bullish)
Shanghai Comp 3116-3188 (bullish)
BSE Sensex (India) 72,401-74,300 (bullish)
DAX 18,406-18,961 (bullish)
VIX 11.72-14.17 (bearish)
USD 104.01-105.73 (bullish)
EUR/USD 1.071-1.090 (neutral)
USD/YEN 154.12-156.97 (bullish)
GBP/USD 1.245-1.273 (neutral)
CAD/USD 0.728-0.738 (bearish)
Oil (WTI) 77.99-80.66 (bullish)
Nat Gas 2.14-2.69 (bullish)
Gold 2 (bullish)
Copper 4.59-5.14 (bullish)
Silver (SLV) 28.00-32.48 (bullish)
Bitcoin 60,667-69,463 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
