SUBSCRIBE TO HEDGEYE.
“Irony is just honesty with the volume cranked up.”
Since I won’t see any of our competitors on the Old Wall write about anemic stock market volume or US #ConsumerSlowing today, I stretched and cited an American short story writer from Texas. Since you don’t have a lot of time this morning, I’ll keep it tight.
“When I’m explaining something to you, if I’m being long-winded, and twisty… I could make you feel vaguely insulted. And you’d have a right to be.”
Back to the Global Macro Grind…
The irony in talking about the truth on Wall Street today is that more and more people agree with it. If they didn’t, there wouldn’t be a net short position in the SP500 (Index + Emini futures and options contracts = net short position of 10,057 contracts coming into the open yesterday).
If buy-side pros weren’t getting real on #InflationAccelerating slowing US growth, you wouldn’t be seeing every hedge fund in America that was running +60-80% net long on January 1 tightening up their net exposures to the growth side of the US stock market either.
Yesterday’s no-volume +0.19% bounce to lower-highs on the SP500 (Russell2000 was -0.3% on the day) had the following volume readings:
In other words, next to Easter Monday, it was the lowest volume Monday we have witnessed all year (and it wasn’t Easter Monday!). So what was it? Was it the weather? When the weather is nice on the East Coast, does everyone take Monday’s off?
You’d be hard pressed to convince me that as a country socializes its downside (and in doing so limits its upside) that its people don’t get lazier. Before you know it, it’ll be cool to work less than they do in France. Ah, la belle Providence, RI!
Enough of my opinion on this no-trust-no-volume-rally-to-all-time-bubble-highs. I’m sure everyone will be able to get out, at the same time. Here’s what else was happening in the real-world of #InflationAccelerating yesterday:
I know, I know. If you back all this stuff out, there’s no inflation. Got it. If you can find me an employer who dynamically adjusts your paycheck to real-time food, shelter, and energy, let me know. I’ll short his stock.
BREAKING: “Ruble Plunge Hitting Russians” –Bloomberg
Unlike some of Mike’s inflationary Big Government Intervention policies in NYC, that headline from his mother ship of market storytelling is economically accurate. When a government burns the purchasing power of its people (its currency), its poor people get hit, hard.
BREAKING: “US Dollar Hits Fresh YTD Lows, Hammering Americans” –NY Times
The NY Times, CNBC, and/or any of its government access offspring wouldn’t dare put what helped JFK get elected (“Strong Dollar, Strong America” on the cover of the NY Times #1960s). That would incriminate Obama for having a Down Dollar policy that is pulverizing America’s poor.
With the US Dollar Down for the 3rd consecutive week:
And that’s with these Japanese dudes printing what, 60-70 TRILLION Yens a year? Hooowah! Gotta love the irony in America’s domestic currency policy when compared to that.
In our government PIG model (our GIP – Growth, Inflation, Policy model, bass-ackwards), using the weapon of mass inflation (P – Policy) there are 2 big things the government can use to drive the value of your hard earned currency:
On the fiscal side, as US growth slows, you can bet your Madoff that Obama is going to spend. On the monetary side, as Janet realizes it’s not just the weather that the US Consumer is eating this summer, I think she’ll get easier (or rhetorically un-taper).
That’s Dollar Bearish, Rates Bearish, and real US Growth Bearish. Since the Policy To Inflate cranks up your cost of living. There’s no irony in that.
Our immediate-term Global Macro Risk Ranges are now as follows:
UST 10yr Yield 2.56-2.67%
Natural Gas 4.59-4.85
Best of luck out there today,
Keith R. McCullough
Chief Executive Officer
The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.
TODAY’S S&P 500 SET-UP – May 6, 2014
As we look at today's setup for the S&P 500, the range is 34 points or 1.52% downside to 1856 and 0.28% upside to 1890.
CREDIT/ECONOMIC MARKET LOOK:
MACRO DATA POINTS (Bloomberg Estimates):
WHAT TO WATCH:
COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)
The Hedgeye Macro Team
Takeaway: Everything that matters in macro happens on the margin.
Editor's note: This research excerpt from CEO Keith McCullough was originally written before this morning's market open. For more information on how you can subscribe to Hedgeye please click here.
So, did the 10-year US Treasury Yield just go over the waterfall of interconnected risk?
After one of the more epic 2 hour moves I’ve ever seen for the 10-year yield (between 8:30-10:30am on Friday), my long-term TAIL risk line of 2.60% broke (2.58% this morning).
Gold is breaking out again and European stocks don’t like it inasmuch as high multiple US Growth Stocks won’t.
After frustrating people who missed the rip higher to $1380 in early March, Gold has been consolidating and finally broke out above my immediate-term TRADE momentum line of $1292 on Friday.
There is 0% coincidence in that after the 10-year yield gave it direction. Gold loves falling bond yields.
Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.