McCullough: The Most Important Point I’ll Make Today


In this brief excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough explains why “S&P 500 positioning is at its most bullish point of 2016.”

Cartoon of the Day: Tough Times In Tokyo

Cartoon of the Day: Tough Times In Tokyo  - Japan cartoon 05.02.2016


Japan's Nikkei is down -23% from its high in July 2015.

What About ISM Manufacturing? Still Falling

Takeaway: In case you missed it, today's ISM Manufacturing index fell yet again both from its cycle peak and month-over-month.

Here's an abridged transcript and chart on the ISM data from this morning's Real-Time Alerts Live via Hedgeye CEO Keith McCullough: 


"That damn data just won’t go up. The ISM data came in at 50.8. That's down versus 51.8 last month. So, to be clear, global growth and industrial growth has not bottomed. All the bottom calling was just a story.


A lot of people hoped that these ISM numbers were better, inasmuch as they hoped for better numbers out of Friday’s Consumer Confidence number and Chicago PMI. These indices are not just missing they’re hitting new lows."


Click the image below to enlarge

What About ISM Manufacturing? Still Falling - update on ISM manufacturing

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.52%
  • SHORT SIGNALS 78.67%

5 CHARTS: A Global #GrowthSlowing Checkup

Takeaway: Investors who avoided #GrowthSlowing equity markets nailed it in the past year.

5 CHARTS: A Global #GrowthSlowing Checkup - World Market No 12.16.14 large large


Still don't believe U.S. growth is slowing? Nasdaq investors do...



Meanwhile in Japan, growth has been neutered for decades. Despite the best efforts of BOJ central planners, macro markets continue to crash.


Check out the ramp in the Yen...


The Nikkei is still in crash mode, even though the BOJ instituted its negative interest rate policy in January



Speaking of negative interest rates...  


Italy's bank-heavy FTSE MIB index remains in crash mode.


And finally, peeling back the onion on the recent reflation trade, take a look at a longer-term chart of much-watched Dr. Copper.


Does that look bullish for global growth?


INSTANT INSIGHT | Reflation Reversal & How To Play It

INSTANT INSIGHT | Reflation Reversal & How To Play It - Dollar cartoon 04.27.2016 


The mother of all reflation trades has inflated equities and commodities off the February lows. Since February 11th, the CRB index of commodities is up 18.8%  while, over that same period, the S&P 500 is up 11.5%.


Not so fast.


Before buying into the latest permabull narrative that U.S. #GrowthSlowing fears have abated so buy equities now, consider this. Once again, macro markets have already begun letting out some of the rally's hot air. Note: The S&P 500 was down for 4 of the last 6 weeks, meanwhile, net positioning is the most bullish it’s been all year (CFTC data).


INSTANT INSIGHT | Reflation Reversal & How To Play It - 05.02.16 Chart


So what are we watching? 


Top of the list is the U.S. dollar. Here is analysis from Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:


"Down Dollar (again) -2.2% last wk (-5.7% YTD) after both the PMI (50.4) and Consumer Confidence #s slowed (again) on Friday; markets are obviously questioning whether Dovish Fed can replace actual growth with some version of stagflation, but USD is signaling immediate-term oversold inasmuch as Gold is signaling overbought."



How do you play the oversold U.S. Dollar? Well, indirectly at the moment, McCullough says.


"Instead of buy USD (not brave enough, yet!), I sent out SELL signals in both Oil (+5.2% last week) and Copper on Friday; both are signaling overbought inasmuch as USD is signaling oversold; Copper $2.31 is an important macro level for the stagflation vs. #Deflation debate; so far longer-term #Deflation is still winning."



Here's the sell Oil signal in Real-Time Alerts:



U.S. #GrowthSlowing has been our call for a while now. We're sticking with it.


For more, watch the video below in which Hedgeye Senior Macro analyst Darius Dale explains why the U.S. Economy is entering "the most difficult part of the cycle."

CHART OF THE DAY: Bearish Sentiment = Non-Existent

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.


"... Not to be confused with SENTIMENT on long-term US Treasuries where they ramped the net SHORT position (non-commercial CFTC futures & options contracts) in the 10YR last week to -97,876 contracts (-1.5x on a 1yr zscore):


  1. SP500 (Index + E-mini) positioning popped to its MOST BULLISH in 2016 at -1,206 contracts = +1.9x (1yr z-score)..."

*Note: +/- 2.0x on a 1yr z-score is considered overbought/oversold


CHART OF THE DAY: Bearish Sentiment = Non-Existent - 05.02.16 Chart

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