Super Huge And Big

“This is going to be super huge and big.”

-Donald Trump

 

Oh, absolutely. We’re talking massively super extra huge, “folks.” The selling opportunity in the US stock market (and buying opportunity in The Long Bond) right now is going to make your YTD returns very excellent and very great again.

 

Super Huge And Big - trump point

 

Back to the Global Macro Grind

 

It’s a good thing there’s no leadership risk developing in the Oval Office. Imagine that was priced into the market? Wow. That might make our #Deflation and #GrowthSlowing risks to macro markets look tame.

 

To review the non-politicized bear case for US Small/Mid Cap, High Beta, and Highly Levered Stocks (i.e. the same super extra very huge bull case for being long Munis, Long-Term Treasuries, and Utilities), it’s the cycle, stupid:

 

  1. US Economic Cycle SLOWING
  2. US Profit Cycle SLOWING
  3. US Credit Cycle ACCELERATING

 

Surely, a Trump or Hillary Presidency would reverse all 3 of those things… after they take the cycle through what Trump calls a “healthy” bankruptcy process, or centrally-planned “wage hike” restructuring?

 

No, very much like the Fed and the Christie-pooch lap dogs at the US Treasury, Mr. Super Huge Big Time was not able to reverse the gravity of the profit and credit cycle in Atlantic City… and he probably won’t be able to do that in Washington, D.C. either.

 

Yeah, I heard. He’s the “anti-establishment” vote amongst two broken brands (the Republican and Democrat Baby Boomer Parties).

 

What you may not have heard is that I’m starting a new party – the anti-establishment Free Market Liberty party. We’re going to be in charge of picking up this mess after all the levered players at the Monopoly table have lost all their money.

 

To review how to survive this stage of the economic, profit, and credit cycle:

 

  1. Raise Cash (don’t run with massive gross long leverage and net long equity exposures)
  2. Buy long-term liquid fixed income securities (short high yield and junk)
  3. At the top-end of the risk range on bear market bounces, short consensus with impunity

 

I know, I know. It’s working. The People hear us on this. Old Wall Street doesn’t. But wow, this is the beginning of something super excellent and, believe me, very very huge.

 

Unlike Mr. Big Time, I have some very specific ways to execute winning the next speed round of Monopoly. On the open today, I want you to position your hard earned net worth and liquidity as follows:

 

  1. BUY Long-term US Treasury Bonds (TLT) ahead of Friday’s #LateCycle jobs report
  2. SHORT the SP500 (SPY) anywhere from here to 1978 for immediate-term downside to 1889
  3. SHORT the Russell 2000 (IWM) anywhere from here to 1070 for immediate-term downside to 991
  4. SHORT the Nasdaq (QQQ) anywhere from here to 4699 for immediate-term downside to 4440
  5. SHORT the Nikkei 225 (or DXJ and its ETF manufacturer WETF) for 1,000 points of downside
  6. SHORT the DAX (Germany) ahead of Draghi walking on water next week (1,000 points of downside)

 

Oh yes, definitely and absolutely. I have a friend who is an excavator… and he told me that my short ideas are going to make the bulls feel like they got hit by a Komatsu. Super huge ideas. Very big.

 

To be very very clear, don’t believe the NY Times. “I have a bigger heart than anybody.” And I really don’t want all of my US, European, and Japanese shorts to impose the pain on PMs that they will. But “America is going to hell” if I don’t short these things.

 

“Believe me, I know a lot about money.” And if you really really want America to be great again (or at least be one of the people who has all the money before it goes back into the Monopoly box), here are some other things you can buy against those shorts:

 

  1. US Equity Volatility (buy your spouse some VIX call options for the next move to 25-30)
  2. US Dollars (buy those only when they are on fire sale closer to 94 on the US Dollar Index)
  3. Gold (take delivery, but have the patience to buy some closer to $1150-1175)

 

I know, I know. It’s working. This is why the establishment hasn’t agreed with me on the cycle for the last 6-8 months. But look at the polls. As the super huge and great Benjamin Graham taught America:

 

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” So if you’re going to vote for my new party and consistent positioning, vote big. This ongoing crash in stock markets worldwide is going to be very very huge and big.

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 1.64-1.85%

SPX 1
RUT

VIX 17.11-24.28
EUR/USD 1.08-1.12
Oil (WTI) 28.56-35.01

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Super Huge And Big - 03.02.16 chart


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