“It’s not the bombs I’m scared of anymore, it’s the weariness.”
- Civil Servant
It’s not the virus everyone is scared of anymore, it’s the joblessness.
With my Old Wall competitors using years like 1918, 1998, and 2018 for their V-Shaped recovery “calls” on uniquely American FOMO, I’ll go back to one of the behavioral periods in world history where an exogenous shock shook a fully employed nation (the UK) to its core.
If you’re looking for a new World War History book to read this Memorial Day weekend, the aforementioned quote comes from an excellent book I’ve been citing called The Splendid & The Vile – A Saga of Churchill, Family, and Defiance During The Blitz (1).
Back to the Global Macro Grind…
Bear market rallies can “feel” like blitzes inasmuch as the resumption of bear market crashes do. You wouldn’t be in Phase 1 of a bear market in the US stock market if volatility wasn’t pinned in a Risk Range of 26-37, btw.
On the heels of much older Global Equity bear markets in Asia, Europe, and Emerging Markets getting slammed overnight, the bubbliness of it all in America continues to float on its own island of Global Divergence. That’s not unlike how American Bulls “felt” in 1940 either.
Older Bears? Yes, the bear markets that we called in both Chinese and European Equities started in 2018, don’t forget. Post the March 2020 USA Blitz, Churchill might have surmised that “now is not the end” of the bear market. “It’s not even the beginning of the end…
But it is, perhaps, the end of the beginning.”
‘But, but, I see your point (Hang Seng smashed for a -5.6% loss overnight taking its Full Cycle Crash to -30.8% from 2018)… and I like it when you remind me of history, cycles, etc. KM… but US Equity FOMO Futures are only down -0.5%.’
Yep, breathe. You just made my point. At the beginning of the end, you won’t be emailing or tweeting at me anything like that.
We, of course, continue to have the most accurate longer-term view of both the US and Global economic cycles out of anyone you read for shorter-term updates. It’s uniquely multi-duration research that has no FOMO or feelings about what the Old Wall needs to hear.
I’m one of the few who has built an Independent Research firm that works for both Wall Street and Main Street, don’t forget.
In another excellent (and well-timed – she published it in 2007) book you should all read, The Forgotten Man, Amity Schlaes analyzed the Great Depression from a free-market history perspective.
*hint: she blames Big Government Intervention by Hoover and FDR for perpetuating the Depression.
Oh, I know. That’s just way, way, way too long-term for anyone to actually care to consider right now. This time is different. What are the FOMO Futures up/down NOW???
It’s ok, I get it. So Darius Dale and I will host a mid-quarter Macro Themes update call this morning LIVE @HedgeyeTV at 11AM EDT. Please ping if you’d like to pay for access to that.
Fully loaded with what the current tally of unforgotten men and women who are jobless right now (35 MILLION which approximates to a 23% unemployment rate for the US Labor Force), by the time I get to slide 151 of the data-deck, I think I’ll have made you think.
For those of you who are ultra-Macro Aware of the initial Deep #Quad4 content we’ve already produced, here’s a looksy at what we’ve added to this slide-deck (by slide-number):
- 131: long-term capex, by sector of the economy
- 132: capacity utilization vs. profits
- 133-137: Fed liquidity Quads vs. Hedgeye Quads
- 138-139: state reopening population and GDP models
- 140: value vs. growth
- 141: Deep Quad 4 vs. Normal Quad 4, by sector and style factor
- 142: Fed Senior Loan Officer Survey
- 143: output gap
- 144: initial claims flow-through to continuing claims
- 145: 2000-02 earnings recession and bear market
- 146: 2000 NASDAQ bounce
- 147: 2Q08 SPX bounce
- 148: money market cash balance (retail FOMO)
- 149: jobless claims vs. SPX
- 150: consumer confidence vs. SPX
- 151: long-term SPX EPS
It’s not about having feelings or FOMO for V’s or “bottoms” anymore, it’s all about The Cycle.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.60-0.75% (bearish)
UST 2yr Yield 0.12-0.19% (bearish)
SPX 2 (bearish)
RUT 1 (bearish)
Healthcare (XLV) 98.08-101.75 (bullish)
Tech (XLK) 91.22-98.19 (bullish)
Financials (XLF) 20.36-22.61 (bearish)
Industrials (XLI) 57.86-65.32 (bearish)
Shanghai Comp 2 (bearish)
Nikkei 190 (bearish)
DAX 102 (bearish)
VIX 26.26-36.87 (bullish)
USD 99.01-100.96 (bullish)
EUR/USD 1.07-1.09 (bearish)
Oil (WTI) 23.17-35.90 (bearish)
Nat Gas 1.52-1.92 (bearish)
Gold 1 (bullish)
Copper 2.31-2.44 (bearish)
Best of luck out there today and a sincere thank you to our bravest on this uniquely American Memorial Day weekend,
KM
Keith R. McCullough
Chief Executive Officer
