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“I wasn’t aggressive enough, and the match turned completely.”

-Justine Henin

That’s how Belgian tennis great, Justine Henin, explained losing in the 2006 Wimbledon final to France’s Amelie Mauresmo. This came after Henin won the 1st set 6-2 hitting “twice as many winners as unforced errors.” (Top Dog, pg 131)

Henin has never won at Wimbledon, but she’s won 7 Grand Slam titles. She won the Olympic Gold medal in 2004 too. At the highest level of competition, she gets #winning and what happens when you don’t play to win.  That’s where the best players beat themselves.

Aggressive Enough? - Justine

While I wouldn’t characterize last night’s competitors in the #GOPDebate as the best leaders in the world, however mediocre the bar for American politics has become, you could clearly see who was playing to win (Fiorina) vs. who was playing not to lose (Bush).

Back to the Global Macro Grind

Since I support neither the Republican nor Democrat party (because, much like during the Nixon/Carter decade, under Bush/Obama both parties have had the same currency, debt, and monetary policies), I guess I’m not your US political party fan boy.

Political partisans can consider me whatever they’d like as a result of that. In case you haven’t noticed, I don’t particularly care what people think about me. On free-markets and economic matters, I’m happy to continue to think for myself.

On that front, I haven’t heard much of anything that is in the area code of aggressive enough from either party’s candidates, yet. Yeah, Trump is Mr. Big Time – great for him, personally. But he’s a protectionist – and that defensive posture is never going to win, globally.

Moving along…

Even though it’s an un-elected body of bureaucrats (that no one in the debate addressed last night), after being wrong 65-75% of the time, one office of the US Federal Reserve has evolved their forecasting process in the last few years.

The Atlanta Fed uses a “GDP Now” tracker (i.e. they update their model in real-time as opposed to plugging in an outcome they’d like to see and retrofitting the model to those 3-4% GDP assumptions). And it’s been better than bad, directionally, as of late.

We have a tracker too (short-form for predictive tracking algorithm) and the Atlanta Fed now has one of the few widely followed forecasts that is tracking in the area code of ours:

  1. Hedgeye Risk Management Q3 GDP +1.4% q/q SAAR, +1.6% y/y
  2. Atlanta Fed Q3 GDP +1.0% q/q SAAR (no y/y forecast)

“No y/y” means that they don’t model either growth or inflation like we do (on a year-over-year basis). The most bullish estimates I’ve seen on Q3 GDP come from the likes of Nancy Lazar at Cornerstone Macro. She just cut her forecast to 3.5% (from 4.0%) q/q SAAR.

Never mind being aggressive enough (i.e. changing your forecasts as the readily available data does), America deserves a President who understands why Washington’s “blue chip” economic forecasting and risk management hasn’t evolved, at all.  

If consensus economists aren’t forced to debate the most accurate pros on the most important rates of change, we’re really not having a free-market debate about anything tangible anyway.

This morning we’re going to get latest #LateCycle slowing update on the US jobs market. Here’s what I’m set up for ahead of that:

  1. Slower-for-Longer (so I’m long Long-term bonds and stocks that look like bonds = TLT, XLU)
  2. US Dollar immediate-term TRADE overbought within a developing bullish TREND
  3. Oil, Gold, etc. immediate-term TRADE oversold within nasty #deflation TAIL risks

In other words, another rate-of-change slowing in the US labor cycle (which we’ve already seen this week from both the ADP and Challenger Jobs Cuts reports), would be short-term bearish for the USD and reflate some of the deflations.

But where does that put the US economy? It’s still in a #LateCycle slowdown (if your perma bull strategist doesn’t get that, show them the negative returns you have being levered long cyclicals, including media stocks who have this thing called the advertising cycle).

And it still has me asking when 1 of the 17 people from last night’s grand-stage of political life is going to get aggressive enough on a #StrongDollar policy that would require us all to accept more asset deflation in the short-term, for long-term All-American gain.

Our immediate-term Global Macro Risk Ranges are now:

UST 10yr Yield 2.15-2.29%

SPX 2068-2098
USD 96.50-98.44
Oil (WTI) 43.89-46.77

Gold 1080-1098

Best of luck out there today,


Keith R. McCullough
Chief Executive Officer

Aggressive Enough? - NFP Jul