“Hmm, Hmm..”
- Yoda
My baby Yoda volatility signals went “hmm…” (again) yesterday… as both the Fed & The Fiscal money printers went “brrr…”
If you get confused when my VIX and VXN (Nasdaq Volatility) signals break down, then break back out (again) above @Hedgeye TREND resistance, join the club. “That is the way of things, the way of the Force.”
Back to the Global Macro Grind…
“Hmm, Hmm, Hmm. That face you make. Look I so old to young eyes?”
God willing, ye Olde Wall won’t start contextualizing the ROC (rate of change) of The Cycle within the lens of Cross Class Volatility until I retire. The establishment empire remains dogmatic and linear as the Hedgeye Nation Revolution rolls on!
I do remember crying when Yoda died. It was 1983 and I was 8 years old. Free market American capitalism isn’t dead yet.
“Don’t fight the fed”, says the establishment. We say, use the ROC Force, and don’t fight The Cycle. I’ve made a lot more money than most front-running the Fed when I started buying Treasuries and Gold in SEP-OCT of 2018.
How does our ROC Rebel Alliance “feel” about their Full Investing Cycle returns since?
You can ask them. Now that we’re riding a new wave of wins against their empire (Short US Dollars, Long Commodities & Inflation), our Alliance has never been stronger.
Some Yale econ dude from Darth Treasury emailed me the other day:
“Your material is very informative and entertaining. But if you believe that the inflation spike is here or right around the corner, you need to incorporate into the thesis why the long end of the curve is…”
No I don’t.
A) Our SELL US Dollar Call was in May
B) Our BUY Treasury Inflation Protection (TIP) was in June
C) Our BUY Commodities, EM, etc. was in June
I wasn’t writing a doctoral thesis. I was following the Force of The Cycle. If we had a “V-shape recovery” into what we call #Quad2, I’d be short Gold and the long-end of the bond market.
During a recessionary #Quad3 economic Stagflation here in Q3, I’m getting paid to own BOTH the long-end of the curve (TLT) and inflation protection (TIP). The establishment econs need to incorporate The Quads into their process.
When it comes to calling rates and real yields, while I do enjoy being called “entertaining” (10-13 years ago Death Star dudes would call me “clever”), those who are profiting from our Full Investing Cycle process prefer to call me accurate.
In other informative Top 3 Things this morning:
Will both the VIX and VXN breakout, again? #Fun… keep moving out there…
- USD (short) – will the US Dollar ever have an up day (or week) again? This inverse-correlation ball (-0.95 vs. Gold and -0.87 vs. SPY this am) is being held underwater for as long as Mnuchin can hold his “big checks” breath – when it bounces, cross asset class vol is going to rip like the cost of living for the jobless in America is! (we remain long of TIPs)
- CHINA (long) – another big buying opportunity for those of you who aren’t yet long of Chinese and/or EM Equities with the Shanghai Comp correcting -3.9% overnight towards the low-end of the @Hedgeye Risk Range – Top 5 Longs from our June (Q3) Macro Themes: KBA, KWEB, EEM, IDX, THD
- VIX – see what happens when front month VIX ramps > 26? Implied vol on SPY went from an ultra-complacent -25% DISCOUNT (vs. 30-day realized) to a +14% PREMIUM, in a day! Keeping my eyes on AAPL Volatility (VXAPL) which broke out on my TREND signal yesterday… short-term concentration (and correlation) risk in the major indices is epic
Hmm, Hmm…
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.57-0.65% (bearish)
UST 2yr Yield 0.12-0.16% (bearish)
SPX 3158-3289 (neutral)
RUT 1 (bearish)
NASDAQ 10,277-10,801 (bullish)
Utilities (XLU) 57.03-61.53 (bullish)
Financials (XLF) 22.33-24.63 (bearish)
Shanghai Comp 3168-3475 (bullish)
VIX 22.11-31.99 (neutral)
USD 95.36-96.89 (bearish)
Oil (WTI) 39.61-42.28 (bullish)
Nat Gas 1.62-1.87 (bullish)
Gold 1 (bullish)
Copper 2.86-2.98 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
