“We don’t forget, we don’t forget them things, Joxer. If they’ve taken everything else, they’ve left us our memory.”
- Sean O’Casey
That’s the opening volley in a good #history book I started reading this weekend: The Immortal Irishman – The Irish Revolutionary Who Became An American Hero, by Timothy Egan.
Yeah, probably not the first book some of my Italian friends were reaching for. But they’d surely prefer reading about that than some end-of-the-world-zero-edge narrative and miss being long of Global #Quad2 last week.
Whether it’s market moves or things that have happened in both my professional and hockey-life, this Canadian Irishman has a long memory. I don’t forget.
Back to the Global Macro Grind…
Welcome to another Macro Monday @Hedgeye! It’s #GameOn here this morning after SPY closed at another all-time closing high at the end of last week.
As a matter of process, we start every week with a multi-factor review of last week’s Global Macro market moves, measuring and mapping them within the context of The Cycle.
As is customary, let’s start with the Global Currency market:
- USD Index was up another +0.3% taking its 1-month price momentum to +2.5% within its Bearish TREND
- EUR/USD was down another -0.3% last week and remains Bearish TRADE but Bullish @Hedgeye TREND
- Japanese Yen was down another -0.9% vs. USD last week and remains Bearish TRADE and TREND
- GBP/USD was up another +0.3% last week and remains Bullish TRADE and TREND
- Canadian Dollar was flat vs. USD last week, is +0.5% in the last month, and remains Bullish TREND too
- Chinese Yuan was -0.4% vs. USD last week, is -1.5% in the last month, and remains Bearish TREND
That’s the thing about using a multi-factor and multi-duration #process… depending on the duration’s definition (TRADE vs. TREND, for example), you’ll see different things.
“We don’t forget them things.”
We embrace the uncertainties and opportunities born out of those things… and plow forward, onto the next. One of those things was another correction/consolidation week for certain Commodities (in Dollars):
- CRB Commodities Index corrected/consolidated by -0.6%, taking its TRENDING (3-month) return to +11.3%
- Oil didn’t correct. It inflated another +0.8% last week, taking its TRENDING 3-month return to +26.2%
- Copper corrected/consolidated by -1.9%, taking its TRENDING return to +13.2%
- Corn didn’t correct. It inflated another +1.3% last week, taking its 3-month TRENDING return to +15.8%
- Lumber inflated another +6.3%, taking its 3-month @Hedgeye TREND return to +57.6%
In other words, no matter how you say it or pronounce it (it’s Muck-uh-luh) a Bullish @Hedgeye TREND is what it is. Full Cycle Investors ride those TRENDs until The Singularity of The Signal says we’re phase transitioning to a new Quad.
My real friends call me Mucker.
The Gold Bugs call me other things. That Irish M is replaced with a different letter, especially after Gold has another -0.4% down week, taking its 3-month loss to -9.2% and its Full Cycle Drawdown to -17.7% from its #Quad3 Cycle peak.
For those of you who are new to the Full Investing Cycle #process, Gold’s Cycle peaked during #Quad3 in both 2011 and in AUG of 2020. I’ll review The Cycle’s Sine Curves on tomorrows Q2 Macro Themes call.
In addition to being in #Quad2, what’s driving Gold lower is both nominal and real rates rising:
A) UST 2yr Yield popped +5 basis points last week (that’s actually a lot) to 0.19%
B) UST 10yr Yield was up another +5bps last week, taking it +81 basis points in the last 3-months
In kind, and right on Cycle Time:
A) High Yield OAS Spread collapsed another -23 basis points last week to 3.02% … and
B) SPY (SP500) was up another +1.1% on the week to an all-time closing high (+7.0% in the last 3 months)
All-time is a long time. That’s why our memories remember the score. How many times were you told this opinion and that (about markets or otherwise)… that, in the end, were just dead wrong?
With the German and Italian stock markets up another +2.4% and +1.3%, respectively, last week (taking their 3-month returns to +10.1% and +11.1%), it’s not just the Irish that are smiling about Global #Quad2 in Q2 this morning.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.60-1.79% (bullish)
UST 2yr Yield 0.14-0.20% (bullish)
SPX 3 (bullish)
RUT 2066-2295 (bullish)
NASDAQ 13,005-13,606 (bullish)
Energy (XLE) 47.70-51.84 (bullish)
Financials (XLF) 33.23-35.05 (bullish)
DAX 144 (bullish)
VIX 16.39-21.27 (bearish)
USD 91.60-93.56 (bearish)
EUR/USD 1.168-1.200 (bullish)
USD/YEN 108.54-111.19 (bullish)
GBP/USD 1.367-1.391 (bullish)
CAD/USD 0.79-0.80 (bullish)
Oil (WTI) 57.49-65.02 (bullish)
Gold 1 (bearish)
Copper 3.94-4.19 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
