“Galileo was totally blind during the last four years of his life.”
- Mario Livio
Damn the Bayesian observations from his final experiments with pendulums. If Galileo’s final years were in 2020, he’d be as blind to the mainstream “news” about real economic gravity as he was in 1642.
Back then in Tuscany, it was the Catholic Church who told everyone (who hadn’t done any gravitational observations on things like the sun) about the truth. Now, thank God, we’ve upgraded to Pump & Kudlow. #GreatJobsReport
Obviously an unadjusted unemployment rate of > 11% is terrible. For those who have been blinded by the light of #InflationAccelerating here in Q3 of 2020, tell them you can see it quite clearly in your Full Cycle Investing accounts.
Back to the Global Macro Grind…
Welcome to another data-driven Macro Monday @Hedgeye! Let’s get right into it with a review of gravitational week-over-week moves in Global Macro starting with the Global Currency market:
- US Dollar Index had its 1st “up” week in the last 7, closing +0.1% within its Bearish #Quad3 TREND
- EUR/USD was flat at $1.18 last week and remains Bullish TREND @Hedgeye
- Japanese Yen corrected a whopping -0.1% vs. USD last week and remains Bullish TREND @Hedgeye
- GBP/USD finally corrected -0.3% vs. USD last week and remains Bullish TREND @Hedgeye
- Norwegian Krone appreciated another +0.7% vs. USD and is +5.0% in the last month alone
- Chinese Yuan appreciated +0.1% last week and is +0.7% in the last month too
China is playing Go while Pump plays checkers. The Rising Power understands that one of the best ways to undermine an Existing Power is to chip away at the credibility of their currency. China’s Yuan is signaling Bullish TREND @Hedgeye.
Since going bullish on both Chinese Stocks (KWEB and KBA) and EM back in June, we also went long of Commodity countries like Norway (NORW +11.5% in the last month) and Russia (RSX) which was up another +3.0% last week too.
Despite the Dollar not being devalued last week, Commodity Inflation continues to blind the deflation camp:
- CRB Commodities Index inflate another +2.4% to fresh 3-month highs and remains Bullish TREND
- Oil (WTI) inflated another +2.4% last week and remains Bullish @Hedgeye TREND too
- Natural Gas ramped +24.4% last week (not a typo) and remains Bullish TREND as well
- Silver inflated another +13.7% last week and has inflated +47.3% in the last month alone
- Lumber inflated another +10.6% last week and has inflated +42.3% in the last month as well
- Cocoa prices inflated +5.2% last week and have inflated +16.3% in the last month
While the Hoodies are all infatuated with their stahks! (many story stocks crashed last week), the Hedgeyes just keep making money on the long side of plenty of the aforementioned plus Palladium (PALL) up +5.6% last week too.
Long Rare Earths (REMX) and Palladium? Yep, blinding inflationary moves for both, baby!
Then there’s the real currency way to be long of Stagflation while it stomps Real Yields, economically: Long Gold! The shining barbarous relic inflated another +2.1% in Burning Bucks last week and is +10.6% in the last month alone.
Oh, but KM, ‘you missed being long the Financials (XLF)’ which finally had an alpha day on fake-news-jobs-Friday, with the XLF +2.1% on the day, taking them to +3.4% on the week.
Yep, I missed it alright. But I won’t miss shorting those or the Russell against all my Inflation Longs this morning!
Love exclamation point Mondays! They are tremendous! Beyond Meat (BYND) like tremendous, eh? Remember when that story stock was at $240? How about when Hoodies chased it to $163 in the 1st week of June?
Howard Penney reiterates the SELL on that sucker at $131 this morning and I remain long of real meat in my freezer.
That real world meat is worth a lot more than it was before the Old Wall and its conflict of interest media begged the Fed & The Fiscal to devalue the purchasing power of The People.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.50-0.60% (bearish)
SPX 3 (bullish)
RUT 1 (bearish)
NASDAQ 10,566-11,277 (bullish)
Tech (XLK) 108.36-117.97 (bullish)
REITS (XLRE) 35.05-37.08 (bullish)
Utilities (XLU) 59.63-61.64 (bullish)
Financials (XLF) 23.40-24.97 (bearish)
Shanghai Comp 3 (bullish)
VIX 21.77-29.57 (bearish)
USD 92.50-93.95 (bearish)
EUR/USD 1.16-1.19 (bullish)
USD/YEN 104.22-106.47 (bearish)
GBP/USD 1.29-1.32 (bullish)
Oil (WTI) 39.80-42.67 (bullish)
Nat Gas 1.90-2.38 (bullish)
Gold 1 (bullish)
Silver 25.40-28.93 (bullish)
Copper 2.77-2.97 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
