“There are two major cycles in American history.”
- George Friedman
We had a hell of a storm in Connecticut yesterday – and there’s no calming down the raging Full Investing Cycle bull market in Gold this morning either!
The aforementioned quote comes from Friedman’s latest big picture macro book, The Storm Before The Calm, where he makes a compelling case for both the “Institutional Cycle” (80 year cycles) and the “Socioeconmic Cycle” (50 year cycles).
“This is the first time in American history that the two cycles will culminate so close together, practically overlapping. That obviously means that the 2020s will be one of the more difficult periods in American history.” Gold looks like it agrees with that too.
Back to the Global Macro Grind…
I’m still pretty sure most Old Wall people aren’t positioned for ongoing Dollar Devaluation and the commensurate and correlating Commodity Inflation. I don’t think millions without power on the East Coast are deflating this Natural Gas spike either!
Since I don’t have power at home (very dark at 435AM!), this morning’s EL will be even tighter than yesterday’s. I like it tight.
Top 3 Things (Premium Institutional Subscriber note that went out at 6AM):
Pump promises to blow the US Deficit to oblivion with another “deal” on unemployment Friday…
- US DOLLAR (short) – and… the Purchasing Power of The People is being eviscerated, on that political agenda, again, this morning, with USD down hard against Euros, Pounds, and Swiss Francs – I’m even long the Yen against the Dollar at this point. We’re making Japanese money printing and fiscal deficit spending look conservative! Gold ramps another +1.6% to new highs with a 30-day USD correlation of -0.98
- COMMODITIES (long) – my signal (Real-Time Alerts) yesterday was to short the 3-day bounce in USD and buy more inflation hedges – added Palladium (PALL) to the large and growing basket of Commodities I own; Oil is ripping +2.1% to a fresh Inflation Cycle (started in June) high; Lumber inflated another +2.4% yesterday and Coffee prices are inflating another +1.4% this morning with $2.25 Nat Gas up on a rope
- YIELD CURVE (pancaked) – epic fail for the “V-Shape recovery” portfolios that chased both Consumer Cyclicals (Airlines, Cruisers, Hotels, Restaurants, etc.) and the Financials when the Yield Curve steepened to a head-fake high of +70bps on 2s/10s on June 8th – since that critical cycle date, the curve has been pancaked to a 3-month low of +41bps as #Quad3 Stagflation becomes clear to Real Yields (collapsing)
Since I’m clearly on the “other side” of the establishment, technocrats, and Friedman’s Institutional Cycle vs. ye Olde Wall, I’ll continue to beat the Hedgeye Nation Disruptor drums of objective, apolitical, and data-driven cycle research this morning.
If Pump doesn’t like his nickname – too bad. It’s not political. It’s just really really good.
Today in 1305, the British tortured and killed William Wallace too… so, Pump, send your ESG boys (the unaccountable and unaudited, “Exchange Stabilization Fund” that buys anything they want overnight) over to come get me. Jonesy and I are ready.
In terms of particular things fractally impacting some or all of the Top 3 Things:
- SPY still has a 30-day inverse correlation of -0.85 vs. USA’s Devalued Dollar this morning
- US Dollar Index is down another -0.5% against both the Euro and Swiss Franc, inflating assets priced in Dollars
- Commodities (CRB Index) have a beast-mode 30-day inverse correlation of -0.98 vs. Burning Bucks
- Gold, up another +1.6% here, now has a Full Investing Cycle return (from Q4 of 2018) = +71% absolute
- Russell 2000 (IWM) will be shorted at the top-end of its Risk Range this AM (its -13% vs. Gold +71% in Cycle Time)
- Long REITS (XLRE) +1.5% off the prior day’s buy signal was a beauty vs. Short Financials (XLF) down -0.4% yesterday
- Total US Equity Volume #decelerated during yesterday’s +0.4% SPY day with VIX signaling another higher-low
- Long Taiwan (EWT) and Long Indonesia (IDX) working for the home team, +0.7% and +1.1% overnight
- Dr. KOSPI was up another +1.4% overnight and remains a Bullish @Hedgeye TREND breakout signal like Dr. Copper is
- Long Russia (RSX) and Long Norway (NORW) add another +1.5% and +0.9% to their big 1-month price momo gains
- Short Spain (EWP) still looks as good as shorting the US Bank Stocks, which totally suck, during #Quad3
- Oil Volatility (OVX) is breaking down below 40 this morning (bullish for the Oil price)
- Apple Volatility (VXAPL) is breaking down below 40 this morning too (bullish for AAPL’s epic market cap)
- Long The Long Bond (TLT) remains obvious with UST 10yr Yield signaling another lower-all-time-closing-low of 0.50%
- Long Bitcoin catches another upgrade (higher-high in the Risk Range) towards $12,099 in Devalued Dollar terms
Stay with The Cycle, my friends.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.50-0.61% (bearish)
UST 2yr Yield 0.09-0.13% (bearish)
SPX 3 (bullish)
RUT 1 (bearish)
NASDAQ 10,449-11,013 (bullish)
Tech (XLK) 106.92-114.44 (bullish)
REITS (XLRE) 34.24-37.22 (bullish)
Financials (XLF) 23.35-24.57 (bearish)
Shanghai Comp 3 (bullish)
VIX 23.13-30.01 (bearish)
USD 92.50-94.65 (bearish)
EUR/USD 1.16-1.19 (bullish)
USD/CHF 0.90-0.92 (bearish)
Oil (WTI) 39.90-42.86 (bullish)
Nat Gas 1.83-2.28 (bullish)
Gold 1 (bullish)
Silver 24.01-26.86 (bullish)
Copper 2.86-2.98 (bullish)
AAPL 395-455 (bullish)
Bitcoin 10,725-12,099 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
