“It’s your big moment.”
-Jonathan Fader
If your morning-to-date isn’t your big moment to make the best next decision in both your life and your portfolios, what is? Is there a magical day that starts every calendar year where everyone is going to get a big compensation-to-date moment? C’mon.
Being in the moment isn’t a new psychological theory or process. Plenty of psychologists like Fader have written about it. The aforementioned quote comes from a great book he wrote in 2016 called Life As Sport – What Top Athletes Can Teach You About How To Win In Life.
No, you don’t have to be a knucklehead student-athlete like me to learn from professional athletes, musicians, or mathematicians. In this business you should, however, have an open mind to evolve and adapt your decision making #process.
Back to the Global Macro Grind…
Unlike long-term cycles and experiences risk managing them, past is not prologue in terms of market returns. Personally, I don’t anchor on “year-to-date” because I don’t have an expectation for new cycles or ideas to start and end on Wall Street’s year-end compensation dates.
Remember, we are Full Cycle Investors. That’s one of the biggest things that makes us different.
Since you already know where we’re different on the US economic cycle (currently in #Quad3 with a headline GDP nowcast of 0.36% for Q4 with #InflationAccelerating being my most incremental asset allocation pivot since OCT), lets look at the US Dollar Cycle for a minute:
A) Bearish USD ended as the “Globally Synchronized Recovery” peaked in Q1 of 2018
B) Bullish @Hedgeye TREND in USD started when China, Europe, and EM all entered #Quad4 in Q2 of 2018
C) Bearish @Hedgeye TREND in USD began as #Quad4 ended in Q3 of 2019, with a decisive break-down here in Q419
In case you didn’t know what the US Dollar loves (#Quad4 globally & locally), now you know. If you didn’t know that the US Dollar didn’t care that consensus wasn’t long its developing inverse correlation to Commodities here in Q4, now you know that too.
That’s one process-driven (Quad and USD Cycle) reason why I bought Coffee (JO) yesterday.
Long Coffee, Cattle, and Energy Stocks? Yep. In markets, like I care what I am long or short of for the rest of my life. I care mostly about making my next best moves. Risk managing my longest-term investments starts with my morning-to-date.
I think about both my personal life (building a family) and building my firm the same way. Investing for the “long-term”? Yes. Tell me about what you’ve been LONG of for the last 13 and 11 years, respectively. I got married in 2006 and started Hedgeye in 2008.
Sounds a little different than ye Olde Wall’s “Top Picks for 2020”, eh?
Yep, I’m different. My firm is different. And what I did into yesterday’s all-time closing high for the SPY was different too. In addition to shorting more US Dollars (UUP) and buying more of a secular grower (Caffeine, JO), this is what I did in my personal accounts yesterday:
- Bought more Housing (ITB) exposure
- Bought more British Pounds (FXB)
- Bought more Cocoa (NIB)
And, yes, I admit it… I went back to ye Olde #GrowthSlowing well and bought myself some 10yr Treasuries with their yield tapping the top-end of my 1.76-1.96% @Hedgeye Risk Range.
Are these my “best ideas for 2020”? No. I have at least 250 long/short ideas being updated on my independent research content platform, daily. And no, generating an idea isn’t looking at a chart. We have a 75-person team powering a real-time research process.
These are my best short or long-term ideas as of yesterday-to-date.
And, unless Trump sells the US Constitution to the Chinese in the biggest “deal” (probably Phase 3) in world history, I reserve the unalienable right to change none or some of those ideas this morning-to-date.
Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND signals in brackets) are now:
UST 10yr Yield 1.76-1.96% (bearish)
SPX 3134-3222 (bullish)
RUT 1 (neutral)
NASDAQ 8 (bullish)
Utilities (XLU) 62.30-65.12 (bullish)
Energy (XLE) 59.09-61.99 (bullish)
VIX 11.51-16.59 (neutral)
USD 96.30-97.61 (bearish)
GBP/USD 1.30-1.33 (bullish)
Oil (WTI) 58.50-61.66 (bullish)
Gold 1 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
