“People like scary stories – there’s a fascination with fear themes.”
-Mel Gibson
I like Mel Gibson’s acting. And I love Braveheart! If you were part of the 13th century English Establishment, being on the wrong side of William Wallace was scary. Kind of like being short Amazon, Apple, or the Nasdaq so far in 2017.
People like to sell scary stories to Wall Street. If you want to jack yourself up all day long on cherry-picked-horror-stories, just read Zero Hedge. Rarely right on markets (but never in doubt), Ivan makes money every time you read him. It’s called click-bait.
I only make money by being the liberally educated guy who goes both ways. When growth is slowing, I’ll pound that into you. While growth is accelerating, I’m getting accused of being a “bombastic” bull who is going to get “run-over by valuation.”
Back to the Global Macro Grind…
Yesterday the US stock market sold-off from an intraday all-time high in the Nasdaq. I’m not sure if that move was scarier for the guy who has been short the Nasdaq for the last 10% of the ramp or for the momo guy who chased the high of the day…
Regardless, the fear based themes rolled out of the biased ad-rev sites in a hurry:
- “The Fed’s Balance Sheet Is Set To Unravel”
- “Tax Reform Is Dead”
- “It’s Now A Matter of When, Not If, Markets Break Down”
That last one is the top headline on zero-market-timing-edge this morning. I think they’ve been running it since 2009.
Since our immediate-term risk management signaling product (Real-Time Alerts) signaled to “sell-some” at the highs yesterday (signaled SELLs on CAT and XME too), I couldn’t be happier that the futures are down this morning with chart-chasing-hyperventilation pending ahead of tomorrow’s jobs report.
Couldn’t be happier? Damn straight. I love buying/covering on sale more than I love Braveheart! Especially when US growth is accelerating (remember 2009 and 2013), there’s no better time to have consensus-fear-based themes run counter to the data.
By the way, since all of the aforementioned headlines are softer than the soft data has been hard to swallow, I’m going to go all super-hard-data at 11AM EST with the launch of our Q2 Macro Themes (ping for access).
Our Top 3 Global Macro Themes for Q2 of 2017 are as follows:
- USA, USA #Quad1 – after calling for a positive inflection in both growth and inflation in November 2016, we expect to see the US economy (and asset allocations) transition to what our GIP Model called the 1st Quadrant (#Quad1) where inflation slows, sequentially, and real GDP growth accelerates in kind
- Reflation’s Rollover – in our Q1 Macro Themes presentation we made the case for both the Reflation Trade and headline reported inflation to peak on top of the easiest compares of the year. The CRB Index, Crude Oil, Break-even inflation rates, etc. have all put in their respective peaks – so now we’ll roll with the rollover call
- Europe/Japan #Divergences – contrary to our positive outlook for the US economy, our GIP (Growth, Inflation, Policy) Model is forecasting a negative inflection in both European and Japanese growth here in Q2 that should trend for at least the next 3-6 months
So, if you want to live in fear, we definitely have some themes to sell you. There’s always a bear market somewhere.
That said you don’t have to gawk and click on our site, incessantly fishing for one-off-data-points. Unlike those who are trying to make money scaring you in ad-dollar terms, we actually have to get macro timing and catalysts right.
We sell process.
So I’ll do my best to do that. Today’s slide-deck is 76 slides long, so there’s plenty of economic and market context to consider. As always, we’re looking forward to your feedback on where you think we might be right or wrong.
Lots of people like stories about saving & making money too.
Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND views in brackets) are now:
UST 10yr Yield 2.33-2.46% (bullish)
SPX 2 (bullish)
RUT 1 (bullish)
NASDAQ 5 (bullish)
XOP 35.01-38.19 (bearish)
RMZ 1127-1157 (bearish)
VIX 10.98-13.29 (bearish)
USD 99.10-101.05 (bullish)
EUR/USD 1.06-1.09 (bearish)
YEN 110.20-112.68 (bearish)
Gold 1 (neutral)
Copper 2.59-2.71 (neutral)
AAPL 140.46-146.29 (bullish)
AMZN 878-923 (bullish)
FB 140-144 (bullish)
GOOGL 835-861 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
