“Why do some men reach for the stars and so many others never look up?”
-David McCullough
That’s a great question from a great speech David McCullough delivered in 1994 titled The Spirit of Jefferson. While we all hold certain truths to be self-evident, what’s obvious right now is that many of us have different definitions of the “truth.”
Our in-house Demography guru, Neil Howe, recently called out a good thought piece in The Atlantic by Kurt Andersen where he argued that “our national post-truth moment is not a sudden phenomenon, but one decades in the making.”
That’s hard to disagree with. So is the market’s last price. While I reach for my phone in the morning instead of the stars, my job isn’t to never look up when and where I could be wrong. The score of the game doesn’t lie; some people who aren’t winning do.
Back to the Global Macro Grind…
“Life, liberty, and the pursuit of happiness.” Whether I’m calling for another market ramp or a correction, that’s what I’m really reaching for every morning. And the truth is (if I’m working), I’m only really happy when I’m getting my market calls right!
What gives me confidence to buy a dip?
A) My Team’s Research View
B) When the market price is at the low end of the @Hedgeye Risk Range
C) Price, Volume, and Volatility are signaling higher-lows and higher-highs
What gives me confidence to sell a rip?
A) Mr. Market’s View
B) When the market price is at the top-end of the @Hedgeye Risk Range
C) Price, Volume, and Volatility are signaling lower-highs
You see, if I want to live a happy market life, I really need to be liberal about my positioning and go both ways. Until some central planner takes it away, I reserve the liberty and unalienable right to change my mind as Mr. Market does.
Why did US stocks bounce off their lows (again) yesterday? Less fear about a North Korean assault certainly played its part, but what about that unfortunately factual little critter called US economic data?
Realizing that some people are highly un-confident about President Trump (many were about President Obama too), what shocked the US Growth “is fake” bears was yesterday’s US Consumer Confidence data:
- US Consumer Conference Board Consumer Confidence #Accelerated from 120.0 in JUN to 122.9 in JUL
- US “Consumer Present Situation” confidence ripped to a new cycle high of 151.2 in JUL vs. 145.4 in JUN
As you can see in today’s Chart of The Day, what US Consumers are feeling and thinking is A) dramatically different today than it was before the election and B) better, sequentially, at the end of the summer of 2017 than it was at the beginning.
Not that US GDP, profits, and jobs #accelerating would trump what people feel about the clown-show in D.C. or anything, but I can assure that as this time-series of US consumer confidence readings rolls over, bears will call it real news again.
No offense to those who have to get paid on political opinion, but I personally don’t care what a raging Republican or devout Democrat thinks (politically) about the rates of change in economic data and/or market prices.
These truths are self-evident. They can be measured and mapped along the slope of a sine curve. They are either accelerating or decelerating (on a trending basis). Period.
While it’s never easy to be positioned correctly for the accelerations and decelerations, I consider most of what I’ve written so far this morning trivial matters.
What’s not trivial?
A) When a topping or bottoming process in a data or market price time-series begins
B) What will be the catalysts and/or causal factors to turn one-off moves into TRENDS
C) What we, as humans, will never know.. until it’s too late
Was yesterday’s US Consumer Confidence “the top” for 2017? I don’t know. We’ll let the data report itself and report back to you then. Has the US stock market already discounted what should be the highest headline GDP reading of the year (Q3)?
For my full thought process on that, read yesterday’s Early Look. My update is that two of the US Growth Sector Styles that I like the most (Tech and Biotech) are going to give me more information to measure and map on that front today.
Both Tech (XLK) and Biotech (IBB) were leaders (again) in yesterday’s intraday rally closing up +0.3-0.4% at +20.1% and +19.8% for 2017 YTD, respectively. But, like the SP500 and Nasdaq, both XLK and IBB signaled lower-highs…
Despite countervailing news items of North Korea’s missile launch and the rip in US Confidence, is this the beginning of the end that so many have been calling for? Maybe. Maybe not.
From a risk management #process perspective, that’s a much more responsible answer to a critical market question than reaching for the star-factor of a political narrative.
Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND views in brackets) are now:
UST 10yr Yield 2.10-2.22% (bearish)
SPX 2 (bullish)
RUT 1 (bearish)
NASDAQ 6190-6326 (bullish)
XOP 28.96-30.35 (bearish)
Nikkei 195 (bearish)
DAX 119 (bearish)
VIX 9.79-15.37 (bearish)
Oil (WTI) 45.91-47.75 (bearish)
Nat Gas 2.85-3.02 (bearish)
Gold 1 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
