Unstoppable Ballers

“Your love makes me strong; your hate makes me unstoppable.”

-Cristiano Ronaldo

 

If you’ve been following Team USA in the World Cup and didn’t know who Ronaldo was, now you know. Ronaldo’s sick pass in the final minute of last night’s USA-Portugal match reminded the ladies who is one of the best looking ballers in the game too!

 

To be fair, while he did get expelled for throwing a chair at his teacher, Ronaldo isn’t exactly a thug. His Mom was a cook and his Dad was a municipal gardener and they named him after Ronald Reagan. In 2009, the young Manchester United star with the flow became the highest paid footballer in the world.

 

Ronaldo plays for Real Madrid now and gets paid in a strengthening currency – British Pounds. After taxes, he makes 21M Pounds/year. That’s earnings, before-inflation-debauchery-accelerating (EBITDA - i.e. the unstoppable and un-legislated worldwide commodity inflation superimposed on poor people by the Fed).

 

Unstoppable Ballers - cristiano ronaldo therichest

 

Back to the Global Macro Grind

 

Unlike the US Federal Reserve, who knows how to trick people who wouldn’t know otherwise into believing that there is no inflation, after he shocks you with dramatic goals like he did yesterday, Ronaldo says “I don’t think about one trick or the other; they just happen.” #talent

 

As the Fed weakens the US Dollar, inflation just happens too:

 

  1. Last week the US Dollar Index was -0.3% to $80.33
  2. The CRB Commodities Index (19 Commodities) was up another +1% week-over-week to +11.8% YTD
  3. CRB Food Index was up another +2.1% on the week to +22.8% YTD

 

Yep, as Hemingway might have said, at first inflation happens slowly – then all at once. Here’s what some of the sub-components of commodity-inflation-expectations did AFTER the Fed cut its growth forecast and eased last week:

 

  1. Silver +6.1% on the week to +7.4% YTD
  2. Sugar +5.0% on the week to +10.0% YTD
  3. Gold +3.2% on the week to +9.2% YTD
  4. Nickel +2.7% on the week to +32.3% YTD
  5. Brent Oil +2.0% on the week to +5.8% YTD

 

True. Brent Oil isn’t really up that much, compared to Nickel. But West Texas Crude is up more than Silver, at +11.5% YTD! And, despite the bearish supply views of Consensus Macro on most things metals, I’m thinking +32.3% is getting someone paid in size being long #InflationAccelerating YTD.

 

But, but, “the Dow is up” … Uh, ok. It’s up a whopping +2.2% YTD.

 

If you want to be a real baller and be long the stuff in the US stock market that’s crushing a low-single digit performance # for the YTD, you need to be long of both inflation and the slow-growth it drives into the consumption core of America:

 

  1. Energy Stocks (XLE) up another +2.6% last week to +14.0% YTD
  2. Slow-growth Utilities (XLU) up another +2.2% last week to +14.5% YTD
  3. REIT stocks (MSCI Index) up another +1.6% last week to +15.8% YTD

 

Exactly. As long as the Fed won’t call the all-time highs in US Rents “inflation”, just buy exposure to the REIT and/or private equity firm that is going to jam his renters with more of it.

 

Other than currencies, commodities, and stock style factors, there are of course other ways to monitor what the real-time market thinks about #InflationAccelerating.

 

Five-year breakevens, for example, were up a full +11bps (basis points) last week to +26bps YTD. You can look at a chart of TIPs (Treasury Inflation Protection, which we continue to be long of on Real-Time Alerts terms too).

 

Or you can look at things like hedge fund net positioning via CFTC (Commodities Futures Trading Commission) net long and short positions:

 

  1. Gold’s net long position popped +15,292 to a net LONG position of +66,572 contracts last week
  2. Oil’s net long position ramped to an all-time high of +478,907 net LONGs (+39,087 net longer on the week)

 

Or you can just call all of this what it is. Because the only thing more dangerous than having the ball on Ronaldo’s foot in the final minutes of a game that is about to go bad is having both Iraq and the Fed come at you on oil inflation, all at once…

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 2.47-2.64%

SPX 1

VIX 10.11-12.98

USD 80.18-80.60

Pound 1.69-1.71

WTI Oil 106.01-107.98

Gold 1

 

Best of luck out there this week,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Unstoppable Ballers - Chart of the Day


Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more