“If you are afraid, change your way.”
- Inuit Proverb

Do you have FOMO (again) during yet another pre-market US Equity Futures ramp? If you’re afraid, don’t whine about it anymore. Just buyem up here and see what giving into your emotions does for you. I’m not afraid of my process.

The aforementioned quote came from a book about a nasty bear that I just finished reading last night called The Twenty-Ninth DaySurviving A Grizzly Attack In The Canadian Tundra, by Alex Messenger.

Bears are real btw. You will be afraid when one starts attacking you. “This was no musk ox – it was much worse. At this instant, the creature’s gaze met mine. I was staring into the sharp black eyes of a grizzly bear.”

Afraid Of Bears? - 03.19.2020 giant bear cartoon

Back to the Global Macro Grind…

Fear the futures? From a CRM (career risk management) perspective, I get it. It’s in my inbox right (and all over my contra-tweet-stream) around this time, every morning, after the FOMO futures spike … on basically nothing, fundamentally.

Now the V-Shaped Bulls might respond to that with Macro Tourist headlines like:

  1. TOP NEWS: “Global reopening headlines continue to have positive spin”
  2. “JP Morgan CEO Dimon says trading revenues in Q2 are so far as good as Q1”
  3. “Kudlow tells Fox News US-China deal intact”

Obviously there are no numbers in headlines that some people are sometimes forced to chase, and… President Pump’s got the former bull market’s back on that:

“Stock market up BIG, DOW crosses 25,000” -Timestamped Trump Tweet, 5/26/2020

Yep, going ALL CAPS on us poor bears (and Treasury Bond market bulls) as Treasuries do absolutely nothing on all the gloriously bullish headline news. Nice, big man. #BeanDeal, nice.

With at least 80% of the “gains” in the last few weeks happening in the pre-market, what could possibly go wrong, from here?

A) The Economic Cycle
B) The Profit Cycle

Yep, I know. If you ignore the two biggest reasons for my going bullish on “stocks” in 2009, 2012, and 2016, you can really just buy stocks (and ignore the signals from the bond market) all of the time, if both the Fed and Pump’s got your back…

Problem with that strategy is that you don’t get them to bail you out until after A & B happen, again.

Personally, with my own money, I’m just a selfish guy. I don’t have “high yields” to make up or performance to chase. My goals are much more aligned with someone who is actually MAKING a lot of money this year like Quadriga’s Diego Parrilla.

My Real Conversation with Parrilla yesterday @HedgeyeTV is here.

In addition to having the Quad in Quadriga, Diego’s “Anti-Bubbles” strategy is a beauty. One of my favorite one-liner’s he has for trading macro markets like these is “these are the rules of the game – embrace the stupidity.”

I couldn’t agree more with Diego’s top priorities in running money:

  1. Capital Preservation … and
  2. Compounding Returns

In that order.

Shorter-term (from here) it’s obviously easier to take the bear side of US Equity Sector moves if:

A) You’re up (absolute) for 2020 YTD (i.e. you preserved capital, not needing a Fed bailout)… because
B) You’re covering your fav shorts (for me Financials) on corrections and re-shorting them on bounces… and
C) You’re buying the damn dips in Anti-Bubbles (like Treasuries & Gold) after selling the rips

The “rips” in Treasuries & Gold aren’t the kinds you see in Financials (XLF was +5.8% on the day when I shorted them yesterday). Ramps like those only happen after a real bear rips your retirement account’s face off.

And that’s the thing about bears. They take their time attacking pro-cyclical returns and positioning. Not many money managers (or new Robin Hoodie accounts) have a profitable track record of changing their ways when confronted with them.

Immediate-term @Hedgeye Risk Range with TREND signal in brackets:

UST 10yr Yield 0.60-0.73% (bearish)
UST 2yr Yield 0.14-0.20% (bearish)
SPX 2 (bearish)
RUT 1 (bearish)
Financials (XLF) 20.20-23.28 (bearish)
VIX 25.98-35.92 (bullish)
USD 98.65-100.89 (bullish)
GBP/USD 1.21-1.23 (bearish)
Oil (WTI) 25.15-36.90 (bearish)
Gold 1 (bullish)
Copper 2.31-2.45 (bearish)

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer

Afraid Of Bears? - Chart of the Day