Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
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Our risk management #process is all about rising or falling probabilities: A) When the US Dollar goes up, on a TRENDING basis, it’s signaling rising probability of Deep #Quad3 or #Quad4 That’s the Signal. On the economic Quad data itself, here’s what Quadzilla (Darius Dale) wrote after Friday’s clean cut US #InflationAccelerating CPI (Consumer Price Inflation) report: “FWIW, the conditional probability of realizing Quad 4 in Q4 crept up to 40.8% (from 39.2%) post Friday’s CPI release.” Yep, I’m thinking I’m taking his word for it on that over the cover of Barron’s saying “its not time for the bubble to pop yet.” You don’t have to have a 100% probability in anything to lose a lot of money in something. A rising probability of #Quad4 keeps a #Quad3 portfolio allocated to more duration (TLT) than going from #Quad4 (deflation) to #Quad3 (reflation) does. All the while, staying long Gold and precious metals works in both Quads. So, while I let the market and data tell me where to go next, I don’t need to lose my mind over those asset allocations and/or who “feels” what about bubbles and their definitions. |
