“It is no use to grumble and complain; it’s just as cheap and easy to rejoice; when God sorts out the weather and sends rain – why, rain’s my choice.”
- James Whitcomb Riley
While it’s raining #Quad4 in Germany this morning, the sun is shining on a beautiful morning for #Quad3 inflation accelerating in America - if you’re long of inflation and not jobless, eating it, that is…
Alongside that #Quad3 pivot (which I was making on Thursday-Friday), I thought I’d entertain you with some poetry this morning. James Whitcomb Riley was an absolute American treasure, writing around 1,000 poems including “Little Orphan Annie.”
If you don’t believe in God, please don’t cancel on me this morning. I still do. And I believe in my team’s data-driven decision making #process too.
Back to the Global Macro Grind…
The Hodlers are coming in hot on my Twitter handle after my Real Conversation with Michael Saylor @HedgeyeTV yesterday. Check it out. It did big box office. We sell #process, as a service, don’t forget.
There’s a lot of re-positioning to get through this morning so let’s start with my Top 3 Things (Institutional Research email that I send out, daily, by 6AM EDT):
- USD (short) – down, hard, off my immediate-term TRADE #overbought signal (where EUR/USD signaled #oversold) from last Thursday has big impact on everything from Silver to Bitcoin (which has a @Hedgeye TREND inverse correlation of -0.88 to USD) – next signal that matters is when USD is #oversold again
- EUROPE (short) – short Southern European Equity markets? We are. Unlike the US (where I’ve moved back to #Quad3 positioning), Germany’s Quad model is reiterating #Quad4 in Q4 and the DAX is down another -1.3% this AM; France’s stock market resumes its #crash, down another -1.3% as well, taking it to down -20.3% since FEB (shorted more Spain on the bounce yesterday too)
- INFLATION (long) – after the CRB Commodities Index ramped back towards its #Quad3 highs yesterday, we’re getting new highs in both Copper +1.1% and Nat Gas +1.7% this morning – instead of buying Treasuries back, I bought Treasury Inflation Protection (TIP) back yesterday alongside Russell Growth (IWO) as Growth is a Factor Exposure you want in #Quad3
Yep, God sent me a signal for rain on the USD on Thursday of last week. While He probably wouldn’t agree that I was doing His Work in shorting the hard earned currency of The American People again, he seems cool with it.
Shorting European Stocks has been ultra-cool in 2020, especially if you’ve had the timing right.
Some people call people who are good at market-timing, “traders.” My God and I are at peace with that too. I’ve been called far worse and it certainly beats being called a waxing intellectual raconteur of #Bitcoin.
I’m just long the damn thing after buying it back (because God told me to via signal) at last week’s lows.
Being long just #Bitcoin would be boring. I like buying lots of things (especially assets with low TRENDING historical volatility like 2007 Napa Valley Sauvignon – Screaming Eagle’s price has inflated to $3300/bottle with no drawdowns unless you drank it).
Here are 3 of the non-bitcoin things I bought on red yesterday:
- Treasury Inflation Protection (TIP)
- Japanese Stocks (EWJ)
- Russell Growth (IWO)
‘Oh no you didn’t buy something with your middle initial in it, Mucker. You’ve been The Bear on the Russell, forever, bro.’ Haha, gotta have fun playing the game or you’ll die in stress and misery.
Russell Growth (IWO) is what it says it is – Long GROWTH, as a Factor Exposure, in #Quad3. Being long inflation when it’s raining down on poor people is the only way to keep pace with Down Dollar too.
As for long of Japanese Equities (EWJ), who’s long those?
And by the way, who’s long the juice in Japan? There was an implied vol (volatility) PREMIUM of +73% (vs. 30-day realized volatility) to capitalize on yesterday. HODL those Call Spreads. #StrongHands
In addition to the wine point I made with Saylor yesterday (that drove hornets who still overpay for belly wash at the store nuts), I went back to the wood and bought myself some Cattle & Pigs (COW) yesterday too.
Why? Same reason why I’d buy any Commodity or Asset that’s on sale during #Quad3:
A) It was on sale
B) It was at the low-end of my @Hedgeye Risk Range
C) It remains a Bullish @Hedgeye TREND Signal
There’s no need to grumble and complain about any of this. Life’s too short not to rejoice about being flexible of mind and Macro Aware. There are so many places to save & make money. My macro God gives me tremendous “conviction” in the poetry of it too.
As Whitcomb Riley reminded us in an age where hard work beat sitting on your hands hodling and hoping, “continuous, unflagging effort, persistence and determination will win. Let not the man be discouraged who has these.”
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.69-0.82% (bearish)
SPX 3 (neutral)
Tech (XLK) 116.92-124.35 (bullish)
REITS (XLRE) 35.27-37.44 (bullish)
Utilities (XLU) 61.72-64.26 (bullish)
Shanghai Comp 3 (bullish)
Nikkei 230 (bullish)
DAX 123 (bearish)
VIX 23.74-29.97 (neutral)
USD 92.66-93.99 (bearish)
Oil (WTI) 39.27-42.01 (bearish)
Nat Gas 2.58-2.99 (bullish)
Gold 1 (bullish)
Silver 23.47-25.66 (bullish)
Copper 3.01-3.20 (bullish)
NFLX 484-539 (bearish)
Bitcoin 10,831-12,298 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
