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“Every love story needs a catalyst of some sort.”

-Ian Somerhalder

I love growth. I do. I absolutely love it. I love it so much that my beautiful wife Laura and I have had 4 children and my firm and I have grown revenues +35% year-over-year to a new record here in the third quarter.

I loved our US #GrowthAccelerating call in 2013 too. So, please, tell your perma bull friends that I’m not a hater of growth. I’m a lover. I love a lot of things. A nice glass of wine. A cigar. Oh, and Damon’s flow! (Ian Somerhalder plays Damon in The Vampire Diaries)

But, as those of you who are bullish on baby making and/or revenue generation know, the manifestation of your love needs a catalyst. My love for the Long Bond as of late has a very simple one – Growth Slowing, Globally.

Loving Growth? - Slow growth snails cartoon 07.14.2015

**Join Keith LIVE on The Macro Show this morning at 9am ET. Click here for access.

Back to the Global Macro Grind

Since I’m gearing up to give you some more buy/cover signals (on red) in Real-Time Alerts today, I’m just trying to show you the love. I have it in me. Do you? What is the catalyst for you to start loving either Global or US growth this morning?

Loving the following Style Factors should continue to get you paid here into quarter-end:

  1. Low-Beta, Big Cap (Equities)
  2. Long Duration Government Bonds
  3. US Stocks That Look Like Bonds

Not loving the following US Equity Sector Styles has shown you the performance love in both Q3 and YTD:

  1. Energy Stocks (XLE) -20.7% YTD
  2. Basic Materials (XLB) -15.1% YTD
  3. Industrials (XLI) -11.0% YTD

I don’t hate, but I’d dislike being long the Financials (XLF) on “rates are going up” (XLF -8.5% vs. SP500 -5.6% YTD); whereas I still like (don’t love) our non-consensus 2015 long --> US #HousingAccelerating is +4.8% YTD (ITB) in real absolute performance terms.

Trust me, like my main man Lee Brice sings in “Hard To Love”, I get it. I’m a married man. I’m taken. Many on the Old Wall have no love for the transparent and accountable independent research platform we have built. How could they love their competition?

I’ve always told people who aspire to achieve all of the over-compensation benefits of this game that that’s not why they should play it. You should rise & grind to play this game every morning because you love it. That’s the catalyst. Not the money.

Today is central-planning-love day in Europe:

  1. ECB overlord Draghi testifies to European Parliament
  2. FX markets have been shorting Euros every day (since the Fed went dovish) into this event
  3. But will he deliver the love?

As of 5:50 am EST, the only comment I’ve seen from an ECB man (Nowotny) is that there’s “no real need to act in the short term.” Uh, oh. That’s not the love European Equity bulls were looking for! Stay tuned for super Mario. He’s up next.

In other Global Macro news this morning:

  1. China’s Manufacturing PMI (purchasing manager index) slowed in SEP to 47.0 from 47.5 in AUG
  2. Germany’s Manufacturing PMI slowed from 53.5 in AUG to 52.5 in SEP

Those are 2 of the top 4 countries in terms of Global GDP contribution (#1 is the USA, #3 is Japan) and, as you know, since both the USA and Japan have also slowed sequentially throughout the summer, the probability of their PMIs slowing in SEP is high too.

Yep. For growth bulls, it’s hard to love that statement. Especially if you’ve been telling clients that neither Global Growth Slowing nor #Deflation matter (and that you should be long the Industrials (XLI) and Financials (XLF), as a result). #Ouch

“So”, what, precisely, is the catalyst for the lovers of cyclical growth, when growth is clearly slowing?

  1. Is it central planning? (600 rate cuts globally didn’t cut it yet)
  2. Is it comping the slow-growth compares?
  3. Or is it sentiment being “too bearish” AFTER consensus had 2015 growth forecasts completely wrong?

Since the Fed, PBOC, and ECB are learning what the Japanese taught them (you can’t CTRL+Print growth) and Q3 US GDP slowing is still one of the biggest catalysts of the year, I guess sentiment is the only relevant catalyst to consider.

And, since I love no-conflict-of-interest-paper-trading in Real-Time Alerts, I’m looking forward to helping you risk manage that day-to-day chop. I absolutely love trying to handicap the immediate-term within the intermediate-term view. What’s not to love about that!

Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND research views in brackets) are now:

UST 10yr Yield 2.09-2.21% (bearish)

SPX 1 (bearish)
RUT 1131-1168 (bearish)
DAX 91 (bearish)

VIX 19.86-27.06 (bullish)
USD 94.59-96.71 (neutral)
EUR/USD 1.10-1.13 (neutral)
YEN 118.78-121.86 (bullish)
Oil (WTI) 43.93-48.61 (bearish)

Nat Gas 2.55-2.68 (bearish)

Gold 1117-1142 (bullish)
Copper 2.29-2.38 (bearish)

Best of luck out there today,


Keith R. McCullough
Chief Executive Officer

Loving Growth? - z ben cod 09.23.15 chart