• Badge

    A Decade of Revolution Declare Your Research Independence

“The profound sense that we are human only through the humanity of others.”

-Nelson Mandela

That’s the definition of a concept in Africa called Ubuntu. In Mandela’s Way, Nelson goes on to remind us “that if we are to accomplish anything in this world, it will in equal measure be due to the work and achievements of others.”

Yeah, I’m bullish on US growth (for now)… but I’ve always been a raging bull on the prospects for change in this profession. Accuse me of being a perma bull on people and I’ll graciously accept the compliment. Together, we can be as good as we want to be.

The aforementioned book was given to me by one of the recent Jedis who made partner @Hedgeye, Ryan Fodor. Unlike many firms we compete with, we’re privately held and love giving our young guns (under the age of 30) membership in our company. Without their work and achievements, us older guys would look a lot like that Old Wall that we’re still trying to take down.

Raging Ubuntu Bulls - nelson mandela

Back to the Global Macro Grind…

How bullish are you about your business? Do you wake up every morning right fired up to take on the day? How about taxes? Do you like those? I love the prospects of lower ones. That will give me more money to invest in both our people and our business.

Looking at the recent Business Activity, Confidence, and Employment data (see yesterday’s Early Look for the data series on that), my sentiment about my business is no longer a contrarian feeling. How the aggregate of business owners feel definitely matters to the US economy. Hopefully, as their business accelerates, they promote and pay their best people too.

While hope is not a risk management process, perma growth bears are definitely hoping this is a “market bubble multiple top.” At the same time, most people who actually perma-run-businesses don’t grind it out every day thinking about their “multiple.”

Is the business accelerating or decelerating? That’s the only question that matters.

Typically, if the business is a public one, the multiple:


A) Expands if both sales and earnings are accelerating

B) Compresses if both sales and earnings are slowing

Bingo. That’s why our macro model adheres to the same rate of change premise.

In 2003-2005, I didn’t run a company. I ran a carve-out P&L of another guy’s portfolio. If I got the rates of change in sales, margins, and earnings right, I’d usually get the stock right.

If I got it wrong, I’d start arguing about “valuation”… and then be more wrong.

I’d humbly submit that this is one of the reasons why Hedgeye is different. I’m not some card carrying academic who has never modeled companies, traded their stocks/bonds, and/or built my own company.

I’m simply a Mucker… who’s actually played the game… who now plays it alongside a 40 person team of analysts who are trying to do it better than the alternative… and that alternative continues to be compromised, conflicted, and constrained.

Back to the Top 3 things in macro this morning (I publish this at 6AM, daily):

I’m still buying Quad2 (growth and inflation accelerating) #StrongDollar stocks… and selling Gold, Bonds, Utes, etc…


  1. ITALY – this isn’t Quad2; this is a short squeeze! With Unicredit +8% on the deal, the MIB Index ramps another +1.6% this morning (good thing we only shorted it for a day last wk!), taking its epic 1-month ramp to +11% (still -22% from the 2015 high); Italian 10yr Yield drops -10bps this morning to 1.89% as yields, globally, correct in kind
  2. OIL – Tillerson’s appointment gives Energy investors another reason to stay long (if Trump nukes the Iran deal, that would too) as Oil hold’s this critical $52-53 level that it has not been able to sustain in 2016; Oil Volatility (OVX) finally breaks down to YTD lows and could break 30 today
  3. POUND – we love #StrongDollar and we like the British Pound – its +0.2% vs. USD this morning to $1.27 (I like it long vs. Euros mind you) on a CPI print of +1.2% y/y for NOV vs +0.9% for OCT #InflationAccelerating as UK growth continues to confound the Eurozone bureaucrats

Yep. I can get right down to the wood if you want. I can be wrong, but I can tell you exactly what positions I like and don’t like. That’s technically my job. I don’t have to wax philosophically, explaining my business principles or partnership to get you that.

When I’m done writing this though, that’s the most challenging part of my day. How do I get humans to work together with a profound sense of both drive and selflessness? While the answer to that question is always changing, human principles don’t.

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

UST 10yr Yield 2.25-2.53% (bullish)

SPX 2198-2276 (bullish)
RUT 1 (bullish)

NASDAQ 5 (bullish)

XOP 40.28-44.60 (bullish)

RMZ 1078-1162 (bearish)

Nikkei 180 (bullish)

DAX 108 (bullish)

VIX 11.05-14.55 (neutral)
USD 99.90-102.05 (bullish)
EUR/USD 1.05-1.07 (bearish)
YEN 111.47-115.91 (bearish)
Oil (WTI) 49.24-54.05 (bullish)

Nat Gas 3.26-3.82 (bullish)

Gold 1150-1191 (bearish)
Copper 2.53-2.71 (bullish)

Best of luck out there today,


Keith R. McCullough
Chief Executive Officer

Raging Ubuntu Bulls - 12.13.16 EL Chart