“If I could get away with not having to perform, I’d be very happy. It’s not my favorite thing to do.”
- David Bowie

If you could get away with not having to deal with cycles, would you be happier? Wouldn’t it be “easy” for the fabulous Fed to mark everything in Equity & Credit to model and ban marked-to-market risks associated with future time and space?

While socializing Full Cycle Investing losses might sound cool to a boomer generation that’s looking to retire, the rest of us who have to work for another 30-60 years (and our children and theirs), shouldn’t get paid for any analysis or performance in that world.

Know of any rock-star banking execs or money managers in Japan?

If You Could... - 01.30.2019 cycle cartoon

Back to the Global Macro Grind…

If you could turn back the clock 3-5 months ago with a full review of your performance mistakes taken into objective consideration, would you be happier if you did anything differently?

That’s actually my favorite thing to do.

As a matter of process, I try to turn back the clock every 3-5 days, reviewing what I could have done better. I’m proud to say that in 20+ years of being marked-to-market, never have I asked for the Fed’s central-market-planning hand to undo my mistakes.

Until I’m on the wrong side of the grass, I will believe that both gravity and cycles matter more to Full Cycle returns than anything else.

If you could turn back the clock 3-5 months ago, would you be happier if your 2020 performance was marked at flat for 2020 YTD? Would you be happier if you could start seeing The Cycle without the baggage of having to chase getting back to break-even?

I’m not here to pander to you like Old Wall banks and brokers do. I’m here to try to help coach you as I coach myself.

Some people don’t want to be coached. Some people do, but they’d never want to admit who was teaching them. Others might say, ‘screw you Coach, I play by different rules. I don’t have to do the work. I just need to know when the Fed tells me to buy.’

That’s cool with me too. That’s what makes a market. Onto the next game day we go.

Yesterday was another great day for the many of us who don’t have to hope and beg for Fed bailouts to get our retirement accounts back in the black for 2020. We’ve been preserving capital and compounding returns to all-time net worth highs the whole way.

Not the whole way as in every day, obviously. I’ve had plenty of bad 3-5 day performance stretches. But, at the end of the day, core Asset Allocations to Treasuries, Gold, and Dollars (then adding US Healthcare and Gold Mining Stocks along the way) have been great.

I know that’s not been everyone’s experience, but writing about reality is one of my favorite things to do.

Why was yesterday such a great day? Well, it was the opposite of the Counter @Hedgeye Cycle TREND moves we’d seen in days prior. If you could make yesterday not happen, would you prefer that?

No matter what you did for the last 3-5 days or 3-5 months, the most important part of The Game in 2020 is what you do today. Here’s how I’m seeing the Global Macro market setup of opportunities (my Top 3 Things that go out to premium clients at 6AM):

The Bear market in the Russell 2000 resumed yesterday with a swift -2.5% decline…

  1. BEARS – they remain everywhere in Global Equities with China’s crash continuing in Hang Seng terms overnight (-0.7% to -30.7% since the China Cycle peaked), Australia resuming its new bear market, -1.4% overnight, and big European Equity markets like France (-1.3% taking its crash to -23% since FEB) and Spain -1.3%, taking its Full Investing Cycle crash to -36% since 2017 (Old Bear there!)
  2. SECTORS – rather than being a manic SPY monkey, I prefer to do modern day macro where I’m long/short Sector Styles of SPY – Long Healthcare (XLV) +1.3% yesterday vs. another bear market reversal in the Financials (XLF down -1.6% yesterday taking its crash to -24% since I made the Deep #Quad4 call this year) – also finally re-shorted Industrials (XLI) at the top-end of my Risk Range yesterday
  3. 10YR – UST -2bps to 0.67% - all of Global Rates markets have little to 0% care for uniquely American month-end markup FOMO in stahks – staying with your core Long-term Treasuries and Gold positions (since Q4 of 2018 when the US GDP and Profit Cycle started slowing and real yields peaked) has clearly been the best long-term Full Cycle Investor absolute and vol adjusted return you could have had

If I could get away with not having to write to you and show you my every market move, every day, in real-time… I wouldn’t. Win, lose, or draw, I love playing The Game out loud every day and being held accountable to every decision I make.

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

UST 10yr Yield 0.61-0.73% (bearish)
SPX 2 (bearish)
RUT 1 (bearish)
NASDAQ 9047-9515 (bullish)
Healthcare (XLV) 98.70-101.38 (bullish)
Financials (XLF) 20.32-24.30 (bearish)
Industrials (XLI) 58.03-69.81 (bearish)
Shanghai Comp 2 (bearish)
VIX 26.22-35.60 (bullish)
USD 98.20-100.50 (bullish)
Oil (WTI) 28.02-35.66 (bearish)
Gold 1 (bullish)

Best of luck out there today,

KM

Keith R. McCullough
Chief Executive Officer

If You Could... - Chart of the Day