“Bitcoin itself is always one big hack away from total failure.”
-Nathaniel Popper
“Total” failure? Or is that just a sensationalist NYT journalist looking to sell some books? How about “rat poison”? That’s what Buffett called Bitcoin yesterday. The aforementioned quote comes from an entertaining book Popper wrote called Digital Gold.
What do I think about Bitcoin? To simplify the complex, quantitatively it signals as a Neutral TREND @Hedgeye right now. “Neutral”? Yep. No position, if that’s ok with you. I’m long of what many in our profession consider rat poison too though: US Dollars.
As far as I know, we’re the only Independent and/or Macro Research firm that made the call that the US Dollar was #Bottoming at the beginning of April 2018. If there are others, happy to have them on board. This isn’t the crowded ship many others are on!
Back to the Global Macro Grind…
Is Buffett pumping Apple (AAPL) at the all-time highs to the populous of poor Old Wall @CNBC viewers who chased Bitcoin at $19,000 going to end up being as poisonous a cost basis as IBM was?
Who knows. What we do know is Buffett’s track record investing in Technology is not good. What we also know is that a #StrongDollar is rat poison for EM Bulls.
EM, as in Emerging Markets. You know, that beautiful part of your “fully diversified equities” pie chart that gives you all of the exotic colors and exposures like mauve and massive draw-downs?
Now you might not call Greek stocks (down -2.8% this morning) part of Emerging Markets (that’s a BOM – Bailed Out Market), but here are some places where that pie chart is missing some pie this morning:
- Indonesia’s stock market was down another -2.1% overnight and is down -6.7% in the last month alone
- Turkey’s stock market is down another -0.5% this morning and is down -12.5% in the last month alone
- Russia’s stock market is down -1.3% this morning and is down -7.9% in the last month alone
And you thought being long FAANG components of Tech (which are UP in 2018) was bad? I know people don’t talk on the phone as much these days but I’d love to hear a RIA in pundit land explain to Grandpa in Talladega what’s happening to his deflating EM pie.
Back to the independent research view, just to #timestamp our views in the order that they appeared:
- Global #Divergences = JAN 2018
- Underweight EM = JAN 2018
- US Dollar #Bottoming = APR 2018
As Global Macro History knows (and we’ve outlined in plenty of Early Looks showing you the back-test on this), the #1 catalyst for the US Dollar to bottom… and then breakout… is the Global Economy entering Quads 3 and 4.
And… the #1 reason why some Macro Funds and Strategists disagree with us on this is that they don’t use our GIP (Growth, Inflation, Policy) Model that dynamically measures and maps what Quadrant economic data is trending in.
“So”… I’m feeling like they might be in need of a cure for the rat poison! #subscribe
To make US Dollar matters more bullish, European economic data continues to get more dovish. On the heels of a rancid Italian Retail PMI print of 42.7 in APR (the Eurozone was 48.6), this morning’s Dutch inflation reading dropped below 1.0%.
That’s right, the ECB Chief Econ (Praet) didn’t call for this to happen, so he’s saying it either shouldn’t have happened or won’t continue to happen… or something like that!
“So”… we’ll reiterate the Short Euro call via EUR/USD again this morning as well.
I’m thinking I could write a good book (lots of adverbs, sensationalism, and libertarian rants) about how the consensus “end of the US Dollar” theme is one big European recession away from total failure.
Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND views in brackets) are now:
UST 10yr Yield 2.91-3.03% (bullish)
SPX 2 (bearish)
NASDAQ 6 (bearish)
Energy (XLE) 72.99-74.70 (bullish)
VIX 14.11-18.56 (bullish)
USD 90.95-93.11 (bullish)
EUR/USD 1.18-1.21 (bearish)
YEN 108.16-110.19 (bearish)
GBP/USD 1.34-1.37 (bearish)
Oil (WTI) 67.11-70.83 (bullish)
Gold 1 (bearish)
AAPL 172.38-188.71 (bullish)
Bitcoin 8 (neutral)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
