“Why do we not have better leadership?”
- John Gardner
The simple answer is that’s not the culture code of self-centeredness in Corporate America these days. As Dr. Vince Molinaro goes on to explain in a great #behavorial book that I just finished called Accountable Leaders:
“We complain, express our disappointment, often our outrage; but no answer emerges…” (pg 21).
“An article in the Harvard Law School Forum cited more than 400 business executives and employees (including several prominent and high-profile CEOs) as being accused of misconduct over an 18 month period. Four hundred. No you did not misread that.”
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye! Do you have Non-Consensus Leadership at both your firm and in your portfolio? If you don’t, it’s never too late to evolve both your leadership and performance #process!
As a matter of Global Macro Risk Management #process, every week we measure and map what happened in macro markets in the prior week with the lens of our multi-factor and multi-duration view.
Sometimes, immediate-term TRADEs are considered Counter @Hedgeye TREND moves. Other times they are the beginning of new Phase Transitions or Bearish to Bullish @Hedgeye TREND reversals.
For an example of that, the Global Currency market has a LOT going on right now:
A) USD Dollar Index was +1.2% last week towards the top-end of my TRADE Risk Range but remains Bearish TREND …
B) Whereas both Yens and Swiss Francs were down -1.7% and -2.4% vs. USD last week and remain Bearish TRENDs…
C) And British Pounds and Canadian Dollars were -0.7% and +0.6% vs. USD last week and remain Bullish TRENDs…
Why? Why don’t we just have Dollar Down vs. everything, forever in Global #Quad2? Well, for starters, not every country is the same in #Quad2. Some Cyclical Country Currencies are stronger than what were Safety Currencies (like Yen and Swissy).
Whether it’s the Indian Rupee (up another +0.9% vs. USD last week, reiterating Bullish @Hedgeye TREND) or India’s stock market (up another +3.2% last week to +12.4% in the last month), Non-Consensus Leadership is becoming more common in macro!
Is your consensus Long Only or US Hedge Fund long Commodities, Canada, and India?
A) Commodities (CRB Index) was up another +1.6% last week to +21.0% in the last 3 months
B) Canadian Stocks (TSE Index) were up another +1.8% last week to +4.9% in the last 3 months
C) Lumber inflated another +3.8% last week to +43.1% in the last 3 months
Believe me, I’ve been there. Canada has a LOT of Lumber!
My homeland is long a LOT of Natural Resources and Rate Sensitive Bank Exposures, including the following core (and still Non-Consensus) Asset Allocations that Full Cycle Investors should have been long since June of 2020:
- Oil (WTI) inflated another +7.5% for the home team last week taking it to +41.8% in the last 3 months
- US Energy Stocks (XLE) inflated another +10.0% last week taking them to +30.3% in the last 3 months
- US Financials (XLF) were up another +4.3% last week to +16.3% in the last 3 months
Oh, you don’t hear anyone complaining or expressing their disappointment in those hard earned, and Rate Sensitive, Asset Allocations, do you? Nope, instead you’ll hear a LOT of whining about:
A) HIGH SHORT INTEREST stocks crushing consensus US Bears
B) Crowded LOW SHORT INTEREST, MOMENTUM, stocks getting wrecked … and
C) RATE RISING exposures getting pounded by… wait on it… rates rising!
We’re not the consensus chorus that is “surprised” by the recent breakout in the UST 10yr Yield which was up another +16 basis points last week to +60 basis points in the last 3 months.
We’re not latently long #Quad3 Longs like Gold, which was down another -1.9% last week to -7.5% in the last 3-months, either. Instead, in US Equity Factor Exposure terms, we’re still long:
A) HIGH SHORT INTEREST (up +3.0% last week to +17.8% in the last 3 months)
B) HIGH DEBT to EV (up +5.3% last week to +18.4% in the last 3 months)
C) SMALL CAP (up +4.1% last week to +12.6% in the last 3 months)
*mean performance of Top Quartile vs. Bottom Quartile, SP500 companies
And, yes, I can handle a -3-5% correction in those Factor Exposures, because that’s what markets do, they correct. What they don’t do is cooperate with complainers who need them to do something they would have preferred to see happen.
Am I complaining about the performance of consensus LARGE CAP Longs like Tesla (TSLA) and Amazon (AMZN) which have been pounded for -29% and -11% losses in the last month alone?
Nope. The Non-Consensus Leaders @Hedgeye have both of those stocks listed under NO Counter @Hedgeye TREND bounce (yet) Bearish TRENDs alongside Gold, Utilities, and Treasuries.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.34-1.62% (bullish)
UST 2yr Yield 0.11-0.17% (bullish)
SPX 3 (bullish)
RUT 2137-2303 (bullish)
NASDAQ 12,618-13,799 (neutral)
Tech (XLK) 124.91-136.34 (neutral)
Energy (XLE) 47.23-53.58 (bullish)
Financials (XLF) 32.17-34.26 (bullish)
Utilities (XLU) 57.76-60.80 (bearish)
Shanghai Comp 3 (bearish)
VIX 19.30-29.50 (bearish)
USD 89.61-92.19 (bearish)
USD/YEN 105.82-108.78 (bullish)
GBP/USD 1.379-1.417 (bullish)
CAD/USD 0.78-0.80 (bullish)
USD/CHF 0.91-0.93 (bullish)
Oil (WTI) 59.39-67.06 (bullish)
Gold 1 (bearish)
Copper 3.93-4.34 (bullish)
Silver 24.74-28.50 (bearish)
AMZN 2 (bearish)
TSLA 579-725 (bearish)
Bitcoin 47,002-53,259 (bullish)
Best of luck out there this week,
KM
Keith R. McCullough
Chief Executive Officer
