CHART OF THE DAY: A Data Dependent Fed Should Be Hawkish on Inflation

05/02/18 08:00AM EDT

Editor's Note: Below is an excerpt from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to get it.

Our process is patient. And it’s also catalyst driven. Shorting Long-term Treasuries (TLT) at the end of last week had 3 catalysts: 

  1. If Powell is data dependent, he should be hawkish on inflation at today’s FOMC meeting
  2. I think Friday’s US jobs report will continue to show US Wages #accelerating
  3. UST 10yr Yield has immediate-term upside to a fresh YTD high of 3.06-3.08% 

The #1 risk to being Long Energy (XLE) and Short Long-term Treasuries (TLT) is the same thing = Inflation Slowing. If our #process was measuring and mapping that the probability of that outcome was rising, I wouldn’t have these positions. 

CHART OF THE DAY: A Data Dependent Fed Should Be Hawkish on Inflation - 05.02.18 EL Chart

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