“When I return will it be the same? Will I be the same? Will anything ever quite be the same again, if I return?”
- Edward Abbey
That’s a quote from an iconoclastic book in late 1960’s called Desert Solitaire. It respected, above all else, The Gravity of nature. It also prefaced a decade of US economic history that many low to middle income earning Americans would rather forget.
Sadly, I’ve spent way too much time writing to you all about the immediate-term “market” setup, our models, and mathematical signals. Now that we’re “re-opening” the US economy to the widest inequality gap, ever, I think Neil Howe’s Fourth Turning is officially in play.
Generational turnings take a long time. The generation that’s led our most precious American “free market” institutions to an increasingly levered life of boom (for the few) and bust (for the many) probably isn’t allowed to see The Gravity of the situation they’re right back in.
Back to the Global Macro Grind…
I get the reply to that. It’s CTRL+ Print and it’s all good for fewer and fewer of us. Heck, if I have more days like I’ve had in the last few, I might be filing some unemployment claims of my own. That’s ok with me. That’s how winning and losing should work.
To be clear, not everyone in my parent’s generation are proud of the heads I win, tails you lose “market” structure they’ve perpetuated. In fact, many non-Wall Street people I speak to are disgusted and embarrassed about it. They’re part of the protests too.
My mom was a teacher. My Dad was a firefighter. These are The People whose pensions won’t be bailed out now that some of their portfolio managers have doubled down on the most speculative leverage the Junk Bond market has ever seen.
Ever is a long time.
‘But you don’t get it you little Mucker. We are the market. They will do whatever it takes to ensure that we get paid.’ Yep, everyone can see that on both Wall Street and Main Street now. Isn’t it, in some cases, a bloody shame at this point that those streets aren’t the same?
‘And look at the charts. Didn’t you see we are professional proctologists. We got smoked, bailed out, and picked every bottom.’ Yep, everyone can see everything, in the rear view mirror. But what do you see when you have the humility to take a drive and look out your window?
For this generation of “leaders”, never has The Gravity of the unemployment cycle been more glaring. And never is a long time too.
So no matter what your money (or the many who have none of that or a job) did yesterday, what are you going to do today? Tomorrow’s US Unemployment rate could be 17-20%. Does the % matter? Will that make everything about the future “better” off the bottom?
For who? And for how long? When the jobs “come back”, will they be the same? Will America be the same?
With a renewed Chinese Trade War, a new war on the Freedom of Speech, and the Freedom to Protest war already on Main Street, has the generational war of Levered Corporate Profits vs. The People just begun? (see slide 128 for details on time and space)
Like America’s Liberty, corporate cash flows matter. They print jobs. Their beloved Fed doesn’t. Will anything ever quite be the same again, if those super-late-cycle cash flows of 2018-2019 don’t come back in a hurry, if they come back?
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.61-0.77% (bearish)
SPX 2 (bullish)
RUT 1 (bearish)
Healthcare (XLV) 98.35-103.95 (bullish)
Tech (XLK) 95.07-99.94 (bullish)
Utilities (XLU) 54.70-62.70 (bullish)
Financials (XLF) 21.23-25.19 (bearish)
Shanghai Comp 2 (bearish)
VIX 25.43-33.89 (bullish)
USD 96.80-100.05 (bearish)
GBP/USD 1.20-1.26 (bearish)
Oil (WTI) 31.83-37.75 (bearish)
Gold 1 (bullish)
Copper 2.36-2.52 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
