“Oil rich boys… had a nice sweet smile… but when you finished meeting with them your socks were missing and you hadn’t even noticed they’d taken your boots.”
-Larry Hagman
Ever been to Dallas? Ever watched the show? All of you Gen Xers out there like me know that was the show you got to “stay up late” to watch in the 1980s. The late Larry Hagman played Oil Baron, J.R. Ewing. He was a beauty!
I spent all of yesterday meeting with Institutional clients in the Big D yesterday. No offense to anyone else we meet with in any other city around the world, but dinners in Dallas are some of my favs.
How were the meetings? Are Texans all fired up about buying Oil and Energy stocks? Not really. And there’s a big contrarian Quad 3 opportunity (on the long side) in that.
Back to the Global Macro Grind…
I’m about to fly to Houston (not one of my favs) and I don’t think they’ll have Wifi on the plane, so I’ll keep this tight. For those of you who get my Institutional Research “Top 3 Things” note pre 6AM EST every morning, this isn’t new:
SP500 down for the 5th day in the last 6 as trumpeted tweets about “deals” run into economic gravity…
- ASIA – amazing short-term equity market #divergences continued in Asia overnight with Shanghai up another +1.6% (and still above @Hedgeye TREND support) vs. KOSPI down again (-0.2% overnight and -1.3% in the last month) and Thailand down a full -1% (down -2.5% in the last month) #AsiaSlowing
- 10YR – another great buying opportunity for both Treasury Bond Bulls and Bond Proxies on last week’s counter @Hedgeye TREND bounce in bond yields; UST 10yr Yield backs off to 2.71% this morning as the German 10yr Bund Yield pulls back from the top of the @Hedgeye Risk Range to 0.15% this morning as well
- FINANCIALS - great place to be (on the short side) for the last few days and that shouldn’t surprise anyone given it’s one of the best US Equity Sector Style shorts when the US economy is pricing in Quad 3, but XLF is signaling immediate-term #oversold here with an implied volatility PREMIUM of +40% vs. 30-day realized (cover-some and re-short more on the bounce)
And from the data dependent department (ran by the other Big D, Darius Dale):
“Not much going on this AM other than Australia’s confirmed descent into Quad 4. Our comparative base effects model has Australian economic growth slowing through 3Q19E, Trump trade tweets be damned.”
You better watch what you say about Trump there, East Coast boy! (actually DD is from West Seattle)
In other apolitical, data driven, news this morning: USA’s Composite PMI #slowed (again) in FEB to 55.5 vs. 55.8 in JAN. That and last week’s ISM #slowing report certainly surprised me to the downside…
Why? Because ISMs and PMIs are survey based and qualitative. They often map the tone of markets. And, given the market ramp we saw in FEB, I thought some of the economic data could at least improve, sequentially.
That drops our nowcast for US GDP to +1.49% for Q1 of 2019.
No, that wasn’t in the Old Wall’s forecast 6 months ago. But today is today and every US stock market bull from Texas to Toledo needs more Trump tweets and Fed #cowbell to carry on.
Lots of risk ranges and quantitative signals for you this morning… our immediate-term Global Macro Risk Ranges (with intermediate-term TREND signals in brackets) are now:
UST 10yr Yield 2.60-2.77% (bearish)
UST 2yr Yield 2.43-2.56% (bearish)
SPX 2 (neutral)
RUT 1 (neutral)
NASDAQ 7 (bullish)
Utilities (XLU) 55.70-57.58 (bullish)
REITS (VNQ) 82.98-85.18 (bullish)
Housing (ITB) 34.00-36.12 (bullish)
Energy (XLE) 64.21-66.86 (bullish)
Shanghai Comp 2 (bullish)
Nikkei 214 (neutral)
DAX 114 (bearish)
VIX 13.40-17.99 (neutral)
USD 95.75-97.10 (bullish)
EUR/USD 1.12-1.14 (bearish)
USD/YEN 110.19-112.20 (bullish)
GBP/USD 1.29-1.33 (bullish)
USD/CHF 0.99-1.01 (bullish)
Oil (WTI) 54.87-57.83 (bullish)
Nat Gas 2.59-2.93 (bearish)
Gold 1 (bullish)
Copper 2.78-2.98 (neutral)
AAPL 169.98-176.95 (bearish)
AMZN 1 (bearish)
FB 161-173 (bullish)
GOOGL 1105-1180 (bullish)
NFLX 346-368 (neutral)
TSLA 261-303 (bearish)
Bitcoin 3 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
