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“Wow, I get to wake up again?”

-Dave Grohl

The former drummer of Nirvana went on to say, “you have to make good with what you’ve got.” And that he did. After Kurt Cobain’s death in 1994, Dave Grohl went on to successfully found the Foo Fighters in Seattle, Washington.

These were the bad boy bands that I grew up listening to in college. I even had the Cobain flow, earrings, and yes, much to my Dad’s chagrin, tattoo. But don’t tell anyone. I have such a politically correct image to uphold!

One of my favorite Foo Fighters tunes was one that Grohl wrote called Monkey Wrench (1997). For bears, in US equity market terms, there’s this thing called year-end that is something similar to that. And wow, did they just ramp it again!

Wow, Again! - d5

Back to the Global Macro Grind…

After going straight down for the 1st two weeks of December (like they did in the 1st two weeks of October), they v-bottomed the US equity futures again. And whoever “they” are – I must once again say, wow – congrats (for now).

One way to ramp the stock market is for a determined group of “they” to buy the living daylights out of SP500 futures in a compressed period of time (say, into options expiration day, for example).

When I say “ramp”, I mean ramp! Check out this ramp in the CFTC net LONG position of SP500 (Index + Emini) last week:

1. SPX net long position (futures and options contracts) was +104,196 week-over-week

2. That takes the total NET LONG positions to +153,107 contracts

3. Vs. the 3 and 6 month avg net positions of +19,661 and -10,751, respectively

#Wow, again!

Since I’ve used the net long/short positions of CFTC Non-Commercial positioning as a contrarian Global Macro indicator for years, this is easily the most interesting data point in my notebook this morning.

Especially for those of you who are uber bullish on #deflation and global #GrowthSlowing in Long Bond (TLT, EDV, etc.) terms, here’s another beauty:

1. 10yr Treasury net SHORT position climbed another -55,605 week-over-week

2. That takes the latest net SHORT position in Long-term Treasuries to a fresh YTD high of -270,383 contracts

3. Vs. the 3 and 6 months avg net short positions of -86,021 and -45,589, respectively

The only other major macro futures/options position I’d call out is that the short position in the Japanese Yen dropped 17,049 contracts to a net SHORT position of -86,805 last week (vs. the 3 and 6 month avg net short positions of -96,791 and -90,156, respectively).

In other words, if you’re fading Consensus Macro alongside us these sentiment moves mean that:

1. While we aren’t currently short SPY in Real-Time Alerts, putting that back on closer to 2090 makes sense

2. Staying with our favorite, low-volatility, absolute return Long Bond positions (TLT, EDV) definitely makes sense

3. Re-shorting Burning Yens (vs USD) on the bounce early last week is where we want to be

If you want to get right racy into year-end and buy some big central planning beta, the Weimar Nikkei is probably where the pin action is going to be at. These Japanese dudes are politically incentivized!

Unlike Asia ex-Japan (MSCI index) which was down another -1.7% last week, the Nikkei was up another +1.4% to +8.2% for 2014 YTD and has immediate-term upside to 17,921 (see our latest Japan deck for the why).

Top-down, while the agenda to mark-up US equity markets into year-end is fun to consider, it’ll be critical to monitor mounting #deflation and #GrowthSlowing risks in the global economy.

Amidst the v-bottoms, Emerging Markets did not. EM Equities (MSCI Index) fell another -0.4% last week to -6.7% YTD. Someone needs to show me some wow there soon, or I’ll just keep waking you up to what we’ve got…

And that’s both growth and inflation expectations slowing, big time.

Our immediate-term Global Macro Risk Ranges are now:

UST 10yr Yield 2.03-2.23%


Nikkei 17162-17921

VIX 14.34-24.16

YEN 118.42-120.63

Oil (WTI) 52.06-57.94

Best of luck out there this week,


Keith R. McCullough

Chief Executive Officer

Wow, Again! - 12.22.14 EL Chart