[UNLOCKED] Early Look: They Didn't Vote

I didn’t sleep last night. After watching the US stock market futures trigger their 12AM “limit down” curbs, for a guy who doesn’t sleep much to begin with, that just wasn’t going to happen.

What I thought mattered were macro market moves. What really mattered though was when my 2 year old daughter, Lucy, woke up and came downstairs to see me at 6AM. She didn’t know anything changed. She kissed my hand and smiled.

Lucy didn’t vote. None of my kids voted. They’re just going to have to watch all of those who did (and didn’t) deal with the election’s outcome. There will be plenty of emotion. But there will be no special accounting for anyone’s partisan tastes.

Back to the Global Macro Grind …

Then my wife got up and asked me what I was going to do…  and I said I’m going to do what I always do. I’m going to write this note, shave, shower, and get on with my day.

Don’t worry, I won’t waste your time this morning like most politicians will. Now isn’t the time for political hacks. It’s game time for the real leaders in this country to rise above the political risk and lead.

And I mean really lead, from the front. Whether it’s your family or firm, leaders need to lead, big time, today.

So let’s start with process. A guy named Trump or a gal named Hillary winning this election wasn’t going to change that our predictive tracking algorithm for US GDP is tracking towards 0%.

As a reminder, our quarterly forecasts for q/q SAAR US GDP are as follows:

1. Q4 2016 = +0.5%
2. Q1 2017 = -0.7%

Whether you love or loathe Trump… that’s the economy his economic team is going to have to deal with. Sounds like a perfect time for a rate hike, right?

Oh, right. That’s the next macro market catalyst – a Federal Reserve rate hike!

Great. Just great. And definitely don’t worry about the Janet Yellen and her colleagues changing their mind. They aren’t political, remember? Lol

I know. That is not funny.

As you know, the last time the Fed raised rates into a slow-down, the US stock market was on its knees within a month. Will this time be different? Or the more you think about change this morning, the less things have changed at all?

Let me just give you some risk management levels to consider so that you can get on with your day:

1. SP500 TREND resistance = 2155
2. SP500 TAIL risk line = 2093
3. US Stock Market Volatility (VIX) TRADE support = 13.11
4. UST 10yr Bond Yield TREND resistance = 2.04%
5. Gold intermediate-term TREND support = 1230

In terms of your what’s happening in your accounts this morning, Gold was the big winner last night.

Up another +2-3% to +23-24% YTD, I’m going to stay with a 10% asset allocation (for investable, liquid assets) to that currency as it builds upon the credibility that no politician has been able to beat.

I’m taking my Cash position back up to 60% and cutting my net asset allocation to US Equities back to 0%. That percentage exposure seems appropriate for an economic cycle that is tracking towards it. The Establishment didn’t vote for that either.

Our immediate-term Global Macro Risk Ranges with intermediate-term Research TREND views (in brackets) are as follows:

UST 10yr Yield 1.69-1.92% (bearish)

SPX 2075-2155 (bearish)
RUT 1150-1208 (bearish)

NASDAQ 5025-5260 (bearish)

XOP 34.05-36.50 (bearish)

RMZ 1065-1139 (bearish)

Nikkei 16201-17270 (bearish)

DAX 10176-10543 (neutral)

VIX 16.50-24.27 (bullish)
USD 96.00-99.25 (bullish)
EUR/USD 1.08-1.11 (bearish)
YEN 102.40-105.90 (neutral)
Oil (WTI) 42.45-47.54 (bearish)

Nat Gas 2.55-3.05 (bearish)

Gold 1260-1324 (bullish)
Copper 2.12-2.45 (bearish)

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer