“All disease begins in the gut.”
- Hippocrates
Don’t know what the Fed is going to buy next? Ask your dentist or doctor. Hearing PE Powell could be in the market to buy just about anything his Wall Street buddies need him to buy after they go down, for a week.
Does that make any of you sick to whatever is left of your “American Capitalist” stomach? If it doesn’t, don’t worry – The People with less money than you are going to eat Dollar Down #InflationAccelerating for us (and probably not like it).
“The truth is that the gut may be the genesis for most of what ails us. The gut bacteria of non-Westernized populations appears to be quite different…” from that of Americans (Wired To Eat, pages 56-60). Many Americans have Fed FOMO too.
Back to the Global Macro Grind…
Doing fundamental, data-driven, rate of change research on The Profit Cycle? Bahahaha! You must be an idiot like me. Take yourself an extended vaca and just buy everything after 5-10% draw-downs, and you’ll probably be good, until you aren’t.
I get it. It’s a fun game to play. As soon as US Equity Volatility was pinning the 40 level and High Yield Credit Spreads started to shake out > +600bps over Treasuries, PE (Private Equity) Powell came to the rescue.
Now what? This can go on “forever”, right? Yep. But companies still have to report reality.
Is there “moral hazard” to this? Seriously, who the hell on the Old Wall cares? When was the last time you saw a major CEO speak plainly about this? They won’t say it, so this battle and cycle tested Wall Street CEO of 13 years will:
Socializing short-term Wall Street losses has an expense line called The Credibility Of the US Dollar.
If the Fed wants to mark speculative Credit and levered Equity portfolios to “model” (instead of letting them trade at free market prices), they will devalue the precious purchasing power of The American People.
That’s only going to perpetuate the inequality gap in American poverty.
I didn’t need it. I’m not poor. But, for no fundamental reason, I got richer in my retirement accounts yesterday because I own super precious and pristine “top of the capital stack” US Credit via my Investment Grade Corporate Bond (LQD) position.
Since I covered my Junk Bonds (JNK) on red during the recent 1-week decline, I’ll re-short those against LQD soon. Poor people can’t hedge inflation like rich people can either.
Back to The People and how they’re going to quite literally eat a higher cost of living while being unemployed. This is how the Fed and their fan club will never explain it to their fellow Americans:
A) The Fed CTRL +Prints US Dollars to “Infinity” and beyond… so that
B) Eventually most people chasing benchmarks need to believe they’ll “buy anything”… then
C) The Dollar goes down, faster, and Commodities, Rent, Healthcare Costs, etc. go up in… drumroll… Dollars
So easy a Mucker can explain it. Yes, that’s with an M. And, no, one of my chief bean counting Partners (Darius Dale) and I aren’t going to waive off what’s really happening here to The People as nothing. We didn’t grow up “rich.” We get that too.
Let them eat empty carbs? C’mon man.
To be clear, Darius, Dr. Drake, DJ, and I all intend to get richer the American Capitalist way. The way we re-allocate our hard earned net worth during Down Dollar #Quad3 Stagflation is as follows:
- Sell US Dollars and Buy more Bitcoin
- Go from short to Long Commodities, as an asset class, in US Devalued US Dollars
- Sell what have been great Healthcare Equity Longs (XLV) and Buy Utilities (XLU)
- Sell my most extended duration bonds (EDV and ZROZ) and Buy more Treasury Inflation Protection (TIP)
- Buy the damn dips in Real Estate, Housing (ITB) and REITS (XLRE) again
- Stay long the Bullish @Hedgeye TREND signals in Tech (XLK) and companies that can grow during Stagflation
Heck, I might even buy myself some Oil and Energy Stocks (XLE), if and when my signal says to. I’m in no rush to do that. That said, as soon as the Fed hit the nitro button on Spooooz yesterday, Oil ripped.
That’s the simplest point to make to The People.
The price they are going to pay at the pump is going up – the price they pay to feed their families is going up. Their rent is going up. Oh… and by the way, if you don’t have a job because The Fed can’t print corporate cash flow, too bad.
I know. It’s sad and pathetic. But if the rich people want centrally planned markets, sad and pathetic is what they’ll get.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.61-0.87% (bearish)
SPX 2 (bearish)
RUT 1 (bearish)
NASDAQ 91 (bullish)
Tech (XLK) 96.56-104.51 (bullish)
Utilities (XLU) 57.46-63.34 (bullish)
REITS (XLRE) 34.38-38.43 (bullish)
Financials (XLF) 21.98-25.16 (bearish)
VIX 29.18-41.72 (bullish)
USD 95.82-98.02 (bearish)
Gold 1 (bullish)
Copper 2.47-2.67 (bullish)
MSFT 180-195 (bullish)
AAPL 321-357 (bullish)
AMZN 2 (bullish)
Bitcoin 9 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
