“Keep your distance, though, Chewie. But don’t look like you’re trying to keep your distance.”
- Hans Solo
Let’s be honest – the title of this morning’s Early Look got your attention. If it didn’t, it should have … when I made the #Quad4 call at the end of January of 2020, that is. That was the beginning of an abrupt end… which turned into an epic #Quad4 Crash in market expectations.
Back to the Global Macro Grind…
Let’s continue to be honest (because many people on Wall Street aren’t). Many people have been trying to call this the beginning of the end since SEP-OCT of last year. They are the people who have been long both the Long Bond (TLT) and Gold the whole way down.
I am not one of those people. I am the guy who got his teeth kicked in yesterday… and still bought the damn dip.
No, I am not the guy who knocks. I am just a guy who holds himself to transparent account. My personal account (liquid long/short book) lost -0.49% of its hard earned capital yesterday. For me and my family, that sucked.
What would suck more is if I suck again today.
But what’s today? Is it another #Quad4 day? Nope, not yet. For those of you who are new to my risk management process, #Quad4, economically, is when both GROWTH and INFLATION are SLOWING at the same time. It’s also when:
A) The US Dollar is going up
B) The US 10yr Yield is going down… and
C) Everything I am long in #Quad2 is going down
Oh, yeah. We’ll eventually get there, Big Fella. But, in the meantime, Chewie, we still have to deal with today. So keep your portfolio at a distance from The Return of #Quad4 because:
A) I shorted the US Dollar yesterday
B) I re-shorted the Long Bond (after covering most of my TLT last week)… and
C) I bought the damn dip in everything that was at the low-end of my Risk Ranges yesterday
Why? Not that the “why” matters like the WHEN does… but if you really have to know why?
A) USD signaled a BIG lower-high within the Bearish @Hedgeye TREND Signal I’ve had since JUNE of 2020
B) UST 10yr Yield signaled a BIG higher-low at 1.55%... and
C) Financials (XLF) in particular signaled a BIG higher-low within their Bullish @Hedgeye TREND too
Did I need to call a guy named “Jamie” to do that? haha. Of course not. As the greatest Macro Strategist in the history of The Rebel Force (Obi-Wan) taught me a long time ago, “what I told you was true, from a certain point of view.”
And no, unlike the pretend hedgies on Billions, I am never certain.
For those of you who were emailing and tweeting at me yesterday who are certain that it’s the beginning of the end of #Quad2, like Leia, “I love you. I know.”
But remember, I am the one who says I know. And I really don’t know. While I’m happy for the people who think they do, as Macro Jedi, Admiral Ackbar exclaimed to the Rebel fleet, I think “it’s a trap!”
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.55-1.79% (bullish)
SPX 3 (bullish)
RUT 2165-2406 (bullish)
NASDAQ 12,993-13,613 (bullish)
Tech (XLK) 128.25-134.61 (bullish)
Energy (XLE) 46.58-54.51 (bullish)
Financials (XLF) 33.01-35.02 (bullish)
Consumer Staples (XLP) 65.05-67.27 (bearish)
Shanghai Comp 3 (bearish)
DAX 146 (bullish)
VIX 18.06-23.34 (bearish)
USD 91.17-92.56 (bearish)
Oil (WTI) 57.43-68.63 (bullish)
Gold 1 (bearish)
Copper 4.03-4.19 (bullish)
Bitcoin 54,002-59,501 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
