“The Spurs consistently perform the thousand of little unselfish behaviors.”
- Daniel Coyle
Whether you’re feeling like you are living in a country that is divided or just frustrated that you can’t be locking arms with your teammates at work, there is a better way. You just need to buy in and be part of a better way.
The aforementioned quote comes from an excellent book on how to build great teams: The Culture Code.
“Neil Paine devised an algorithm that used player performance metrics to predict how many games a team should win… the vast majority of coaches win roughly the number of games they should win, given their players abilities – except for one. His name is Gregg Popovich. Coach of the San Antonio Spurs, he resides alone at the far end of the graph.”
“This is why the Spurs rank as the most successful team in American sports over the last 2 decades, winning 5 Championships and a higher % of games than the New England Patriots, the St. Louis Cardinals, or any other storied franchise.”
Popovich came from the US Air Force Academy. He “values discipline above all”, but he also values the relationships he builds with his players. He’s famous for his “wine lists” and team dinners. He commands respect because he earns it.
Back to the Global Macro Grind…
In my world, respect is earned, not allocated. If you want to work for my firm or play on one of my hockey teams, I don’t really care how much “talent” you think you have. I care mostly about your values: work ethic, selflessness, etc.
How are you going to build or be part of a better team and/or country?
Do you care? A lot of people actually don’t. It’s all about their last bonus or big trade. Politicians are the worst of the lot – that’s why the weakest links on Team USA are divided. This has been developing, as it usually does, at the end of The Fourth Turning.
When it comes to your team’s investment process? Do you have one that wins when everyone else’s does? That’s called beta.
What we’re focused on is delivering alpha, across the Full Investing Cycle.
Yesterday was a great example of that, where being long “the market” (which means absolutely nothing to me, unless defined from a Global Macro perspective) got crushed by being long and short the right components of major markets.
If all you were looking at was the US Equity market (please don’t!):
A) NASDAQ +1% to an all-time closing high vs.
B) Russell 2000 down -1% to -18% from its Cycle high
That made complete sense as the NASDAQ and/or Secular Growth is a long during #Quad3 Stagflation whereas Small Cap, as a Factor Exposure, is an underweight or short.
If you were looking inside the US Equity Sector Styles:
A) REITS (XLRE) were +2.7% on the day vs.
B) Financials (XLF) were down -0.9% on the day
Whether you’re in Deep #Quad4 Deflation or #Quad3 Stagflation, REITS beat Financials – that’s why Financials (XLF) remain in bear market #crash mode -25.5% YTD vs. REITS (XLRE) only -7.5%.
In FX, if you were:
A) Short US Dollars and
B) Long Japanese Yens
#WellDone. Again, even the Yen looks good when the Fed & Fiscal are this blatantly committed to central-market-planning and US Dollar Devaluation. What did you want to be long against those Dollar Shorts? Commodities priced in Dollars!
Corn, Soybeans, Copper, Oil. #Boom
And, of course, being long the top of the capital stack in Fixed Income remains fantastic vs. the Junk (JNK) that’s now in the Fed’s trunk of creative solutions. Being long TIP and IVOL (TIPs with a kicker) have been tremendously fantastic asset allocations too.
So, again, who do you want to play for?
What team do you want to be on? Do you want to work towards having the world class discipline to execute on your Full Investing Cycle #process? Or do you want to wake up chasing a crowd of drawdown risk?
For those of you who have friends in this business who are giving up essential free market Liberty to purchase a little more short-term compensation and job safety, I say you wish them well…
Just remember why Americans officially severed ties with a centrally planned Kingdom on July 2nd, 1776. We call it Independence Day in America for a reason. Spread the good word and celebrate your team’s success. You didn’t need an unelected Fed for that.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.62-0.73% (bearish)
RUT 1 (bearish)
NASDAQ 9734-10,242 (bullish)
REITS (XLRE) 33.06-36.03 (bullish)
Financials (XLF) 22.08-23.67 (bearish)
VIX 28.09-37.13 (bullish)
USD 96.60-97.85 (bearish)
Oil (WTI) 36.92-41.22 (bullish)
Gold 1 (bullish)
Copper 2.61-2.76 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
