“Self-improvement takes dedication and self-discipline.”
- David Goggins
It’s neither my nature, nor do I have time to drown myself in every mistake that I make. Since literally every move I’ve made in markets has been timestamped since I started Hedgeye in 2008, all of it is sitting right there for all to criticize or compliment.
I tell the kids that I coach and the analysts that work here that it’s all about moving onto the next play.
Navy SEAL, David Goggins, reminds us of this mindset in Can’t Hurt Me: “Whatever your goal, you’ll need to hold yourself accountable for the small steps it will take to get there. The dirty mirror you see every day is going to reveal the truth.” (pg 73)
Back to the Global Macro Grind…
“Dirty mirror?” Yep, unlike whoever doesn’t want to admit it, it was an immense life-struggle for me to get into your inbox in the last 12 years. It was a struggle this morning. It’s my struggle, each and every market day.
And I like that. I need to struggle to evolve and survive.
“By the time that I graduated, I knew that the confidence I’d managed to develop didn’t come from a perfect family or God-given talent. It came from personal accountability which brought me self-respect, and self-respect will always light a way forward.”
- David Goggins
As we continue to grow the Hedgeye brand and data-driven content platform, I continue to get the same kind of critical and complimentary feedback I’ve had my whole life. I know what some people #like and don’t like about me.
I also know that I am who I have become… and I don’t have time to waste trying to be anyone else.
With that, onto executing on my risk management #process, and onto the next play. After another no-WWIII with Iran type whip-around with a Chinese virus, it is time to risk manage another v-bottom in certain markets.
Not ironically, the biggest v-bottoms are in stock markets. FX, Commodities, and Sovereign Bond markets, not so much.
Ultimately, my decision making process is designed to simplify the complexity of a non-linear ecosystem:
A) What economic Quad is the country in question in … and
B) Does my multi-factor and multi-duration market Signal agree with that Quad nowcast
For those of you still asking why I covered my TSLA mistake at $500.22/share on January 16th, my decision making process is the same for a stock as an expected asset allocation for an economic Quad:
A) The call my analyst is making on a stock is usually trumped by
B) My multi-factor and multi-duration market signal
*Note: that’s why I’m accountable for my mistake – my analyst didn’t short or cover the position in RTA. I did.
For TSLA, that signaling process went Bullish @Hedgeye TREND over a month-ago. For those of you paying for my @Hedgeye Risk Range product, you’ll see TSLA’s Risk Range = $646-970/share (and it says Bullish TREND like AMZN, NFLX, etc. does).
*I’m listing my entire list of Risk Ranges and @Hedgeye TREND signals today.
That’s right, another one of my analysts doesn’t like NFLX either. But my signaling process likes it, for now. He (Freedman) likes Disney (DIS) though. And, good news for him! My signaling process says Bullish @Hedgeye TREND for that idea.
On the buy-side, I used to be a Sector focused and bottom-up stock analyst. I did the job so I know how to work alongside my analysts, adding layers of risk management that I wished I had if I had bosses who had them.
A + B in my A/B Test beats A or B when they stand alone.
Enough about “stocks” (with aggregate S&P Earnings currently down -0.09% year-over-year for Q419), what do we do with this macro market move this morning?
- FX – no change as the US Dollar continues to signal #Quad4 in Q2 for both China and the USA
- RATES – no change as both the UST 2yr and 10yr Yields remain Bearish @Hedgeye TREND
- COMMODITIES – no change as both Oil and the CRB Index remain new Bearish @Hedgeye TRENDs
- STOCKS – DAX and Nikkei moved back to Bullish @Hedgeye TREND this AM, the Russell 2000 did not
Unlike China and the USA, we have Germany’s DAX (equity index) complementing its current #Quad2 (growth and inflation accelerating at the same time) nowcast and its pending non-Quad4 for Q2 of 2020.
As for Buttigieg and virus-vaccines, I know nothing. And I won’t make the mistake of telling you that I care about the qualitative opinions of pundits on either subject. I am much more confident struggling with my own process.
Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND signals in brackets) are now:
UST 10yr Yield 1.48-1.72% (bearish)
UST 2yr Yield 1.32-1.50% (bearish)
RUT 1 (bearish)
NASDAQ 9092-9495 (bullish)
Utilities (XLU) 67.56-69.53 (bullish)
REITS (VNQ) 93.81-96.21 (bullish)
Energy (XLE) 51.76-56.29 (bearish)
Tech (XLK) 95.03-99.97 (bullish)
Shanghai Comp 2 (bearish)
Nikkei 228 (bullish)
DAX 120 (bullish)
VIX 12.75-20.02 (neutral)
USD 97.18-98.24 (bullish)
EUR/USD 1.09-1.11 (bearish)
USD/YEN 108.28-109.85 (bullish)
GBP/USD 1.29-1.32 (bullish)
USD/CHF 0.96-0.97 (bearish)
Oil (WTI) 48.99-55.66 (bearish)
Nat Gas 1.81-2.04 (bearish)
Gold 1 (bullish)
Copper 2.44-2.68 (bearish)
AAPL 307.26-329.16 (bullish)
AMZN 1 (bullish)
FB 199-215 (neutral)
GOOGL 1 (bullish)
NFLX 333-376 (bullish)
TSLA 646-970 (bullish)
Bitcoin 8 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
