“Waldseemuller decided to call the hemisphere “America” in honor of Amerigo Vespucci.”
- George Friedman
If we want to make America great again, maybe we should ask the Italians for their input? I love Italian wine (2010 Brunellos are very tremendous). After all, a German named this place after an Italian, eh.
In case you didn’t know, per Friedman in The Storm Before The Calm, “the man who named the Western Hemisphere was Martian Waldseemuller. He was a German mapmaker who, in 1507, was drawing a map of the new world…
Amerigo Vespucci, an Italian explorer sailing for the Portuguese, was the first to realize that Columbus had not visited India but had encountered a new landmass” (pg 20). Pump just called it the land of the Super V!
Back to the Global Macro Grind…
To be fair, looking at yesterday’s US Consumer Confidence data, I think Pump nailed it. It’s definitely an inverted V. The data doesn’t lie, Larry Kudlow does. As you can see in today’s Chart of The Day:
A) US Consumer Confidence #slowed from a downwardly revised 91.7 in JUL to a new CYCLE LOW of 84.8 in AUG
B) To put that in context, the Cycle High was AUG of LAST YEAR at 134.2… and
C) The new Cycle Low of 84.8 is LOWER than the APR 2020 low of 85.7
Yes, going ALL CAPS on that, again, because it is truly and non-tremendously and Inverted Super V.
But how and why could this be happening in August?
Well, since Pump and Larry love their “phases” (yep, remember “Phase 1 of the Chinese #BeanDeal people were chasing stocks on in December? They’re still working on that), we call this Phase 3.
We outlined the 3 Phases of The ROC (rate of change) of the US economy at the end of June in our Q3 Macro Themes deck (we’ll be presenting our Mid Quarter Macro Themes Update at 11AM EDT today, ping for access):
- Phase 1 (March-April) = economic collapse, depression, etc. as the economy was slowing from its Cycle Peak anyway
- Phase 2 (May-July) = Short-term economic bounce from economic depression levels not seen by modern humans
- Phase 3 (August, until the data changes) = resuming #Quad3 Economic Stagflation within a y/y GDP and Profit Recession
What happened in AUG was The People (not CNBC people):
A) Figured out they weren’t getting their jobs and/or small businesses back…
B) Figured out that their REAL Cost of Living is inflating at an accelerating rate
Oh, you don’t “see that inflation” until some dude or dudette at the Fed says they see it? C’mon. Be serious. The CRB Commodities Index (19 Commodities) has inflated +42% from its Deflation Cycle lows in May.
“Rich” people like you and me (oh yeah, I’m feeling pretty big time hanging out by myself with all my #Quad3 money in my office these days) are mostly “feeling” fine. Unless you own restaurants, hotels, etc., that is.
New Home Sales were a legit V yesterday too. That’s not the economy though. That’s a small part of the economy (in terms of marginal impact on solving for a year-over-year decline in GDP) where the mobility of money (for people who have it) is in motion!
The problem with that damn Consumer Confidence reading is that they asked The Other People…
Anyway, who cares, eh? Well, no one who is in the business of marketing the stock market as a Super-V shaped economic recovery. That’s for damn sure. But you are not myopically staring at the Dow, in points, as the barometer for “the market” anyway.
You don’t even have to look very closely at the actual market (i.e. the bond, currency, commodity, credit, equity market) to see that the market has nailed #Quad3 Stagflation since most of the Consumer Cyclicals and Financials put in lower-highs in June.
Pull up the Pump Chart of Airline Stocks (JETS), which I re-shorted yesterday, since June:
A) It went from $22.50 ish on June 8th to $15.50 ish by the time the market started pricing in Phase 3 in AUG
B) The Super Inverted V math on that is you lost -31% of your Hoodie account money on being long the Fake V
Now, if you’re one of the 75+ MILLION newbs to trading Stahks! that only go up (ex-HTZ), you need to be up +45%, from $15.50 JETS to get that money back to break-even. No worries.
Alternatively, if you stayed with the core #Quad3 Asset Allocations (Tech, Treasuries, TIPs, Gold, Commodities), and shorted Consumer Cyclicals (I re-shorted Marriott Hotels, MAR, yesterday on green too) at every lower-high alongside Bank Stocks…
Yep, you nailed it. Tremendously well done. You can probably afford to buy a 2nd or 3rd home now from someone in foreclosure.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.53-0.73% (bearish)
SPX 3 (bullish)
RUT 1 (bearish)
NASDAQ 10,948-11,513 (bullish)
Tech (XLK) 112.16-120.35 (bullish)
Financials (XLF) 24.04-25.43 (bearish)
VIX 21.20-27.60 (bearish)
USD 92.27-93.86 (bearish)
Oil (WTI) 41.77-43.68 (bullish)
Nat Gas 2.20-2.71 (bullish)
Gold 1 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
