“Nations of Europe: Britain is organizing your starvation!”
- Joseph Goebbel
In case you don’t remember, Goebbels was the “Minister of Popular Enlightenment” for Hitler’s Nazi Germany. The aforementioned quote is from June of 1940 after the Germans beat France into submission.
“There can be no doubt that Britain will receive the same sentence as France… we are now the leaders in the clash between continental Europe and the plutocratic British island people.” -Goebbels (The Splendid and The Vile, pg 103)
History is littered with memories of rising powers attacking existing powers. We are in a war with a virus. But we’re also in a developing cultural and political war with the Chinese. Let’s hope Washington vs. Beijing never turns into London vs. Berlin.
Back to the Global Macro Grind…
No worries on that, the US Profit Cycle, the election, or anything else that’s not a day past a Macro Tourist’s headline nose. All good this morning. Pump’s out there with Phase 15 of something that looks bullish about Chinese talks and oil, eh….
And I’ll go back to shorting myself some Asian, European, Latina American, and … yes… US FOMO stahks! on that.
As Darius reviewed in yesterday’s Early Look, a Hurst Exponent of 0.5 is basically Brownian Motion. This fractal observation typically alternates between your feelings and nothingness about what a market price is doing on any given day.
How do you deal that? That’s easy – make your buy/sell decisions mathematically rather than emotionally. A/B Test:
A) Are you Bullish or Bearish on that market exposure from an intermediate-term @Hedgeye TREND perspective?
B) Is the market price at the top, bottom, or near the middle of the @Hedgeye Risk Range?
For people that chase charts (momentum), that’s not easy to do. That’s why one-way levered long traders and investors alike go away when momentum either crashes or gives way to Bearish @Hedgeye TRENDs with lots of Brownian Motion chop.
What I can’t understand right now is why the FOMO isn’t in the actual momo…
From an intermediate-term TREND perspective, every chart monkey in the Federal League should be able to see that the “upward sloping” moving averages are in very few major asset classes and/or equity indexes right now.
Two of my Top 3 Asset Allocations for Deep #Quad4 have “awesome charts” – and they were both for sale yesterday:
A) Long-term US Treasuries (TLT and EDV)… and
B) Gold (GLD)
Yet, other than one client call on the real-time matter, I had quite literally no Institutional Client questions on how big one should be going (grossing up long exposure) in both the Long Bond and Gold at the low ends of my Risk Ranges…
But at last Wednesday’s lower-highs for the Russell 2000 and SPY? Oh my. My inbox was in Phase 14 of FOMO!
You can see #NoFOMO in terms of Global Macro net positioning (non-commercial CTFC futures & options contracts):
A) The net LONG position in the UST 10yr Bond is only 5,514 contracts (long +372,991 contracts is the 3yr high)
B) The net LONG position in Gold is +184,067 contracts (long +292,066 contracts is the 3yr high)
But wow did people want me to get interested in buying some “cheap bank stocks” at last Wednesday’s lower-bear-market highs. In real-time news, Financials (XLF) were down another -2.2% yesterday taking their crash to -30.7% YTD.
So on the short side today, while I doubt you’ll get the Short Selling Opportunity you did in either Regional US Banks Stocks (KRE) and/or Berkshire (BRK.B) and the XLF last week…
Just stay with the same A/B Test and SELL Bearish @Hedgeye TRENDs when they’re at the top of my @Hedgeye Risk Ranges against your properly risk managed Treasury and Gold longs. Hedgeye Nation of Global Macro, Unite!
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.57-0.74% (bearish)
UST 2yr Yield 0.15-0.23% (bearish)
SPX 2 (bearish)
RUT 1199-1347 (bearish)
Tech (XLK) 87.11-93.19 (bullish)
Financials (XLF) 20.18-23.40 (bearish)
Shanghai Comp 2 (bearish)
VIX 30.69-42.32 (bullish)
USD 98.88-100.93 (bullish)
EUR/USD 1.07-1.09 (bearish)
Oil (WTI) 9.06-28.13 (bearish)
Gold 1682--1742 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
