“The arrow doesn’t seek the target, the target draws the arrow.”
- Matthew McConaughey
The American born 51-year old Irishman from Uvalde, Texas goes all fractally gravitational on us there, eh!
Love that. And love playing The Game out loud alongside you where I don’t “have to make the call” on #Quad4 until The Game comes to me. As McConaughey reminded me in his great #behavioral book:
“Yes, we must chase what we want, seek it out, cast our lines in the water… but sometimes we don’t need to make things happen.” -#Greenlights, pg 225
Back to the Global Macro Grind…
Most of the time in macro markets, we don’t need to make “calls” or make things happen. We need to let things happen. We need to let them play out, in Cycle Time. And, most importantly, we need to have patience embedded in our #process.
Chasing 50-day moving monkey charts (up in the Dollar’s case 4 weeks ago, or down in the NASDAQ’s 6- 8 weeks ago) isn’t doing what The Cycle is doing. It’s panicking alongside what the crowd thinks something might be doing.
Having patience starts with having a Full Investing Cycle process. If you are A) not Macro Aware of where The Cycle is coming from (base effects)… you’re probably B) getting whipped around by Macro Tourist headlines.
Examples: “Sell Growth, Buy Value”… or “It’s a Mid-Cycle Slowdown, Sell Small Caps and Bitcoin.”
Those are examples of “calls” people make and others pay attention to that have zero to do with The Cycle as we’ve been defining, measuring, and mapping it @Hedgeye for over 13 years now. They have zero back-tested validity too.
To review what you should have done instead of trying to make things happen with “calls” like those:
A) You should have realized that you buy both GROWTH and VALUE in #Quad2
B) You should have bought the damn dips in Commodities, Small Caps, and Bitcoins in the last month
Our long Commodities call wasn’t a “call.” It was a Full Investing Cycle Asset Allocation back in June of 2020. It ran squarely with both The Cycle and how we’ve back-tested it:
A) Whether The Cycle is in #Quad3 (initially it was) or #Quad2 now, you BUY INFLATION … and
B) You Short US Dollars… because it perpetuates #InflationAccelerating in the things people buy, in Dollars
So easy a Canadian Irishman can do it, eh.
Today is going to be a very Touristy day because everyone on Old Wall Media that was recently turned into an expert in the “non-linear breakout in bond yields” (every Cycle breakout is non-linear!) will be a commentator on Copper charts.
And guess what drove us to Short Long-term T-Bonds (and Gold) to begin with…
A) #Quad2 breakouts in Copper, Corn, Lumber, etc. prices that started in JUN 2020 and took off in NOV 2020… and
B) The commensurate #Quad2 ramps in both GROWTH and INFLATION data that has manifested in NOV-MAR too
On The ROC (rate of change) of the economic data, check out this chart of the day on Durable Goods for MAR:
A) US Durable Goods ramped to +25.0% year-over-year growth in MAR vs. +3.5% y/y in FEB
B) US CAPEX continued to #accelerate to +11.6% y/y growth in MAR vs. +9.2% y/y in FEB
Yes, these ROC numbers were released yesterday. And, yes, they are backward looking numbers that anyone who is long of core #Quad2 Sector Styles like Industrials (XLI) and Basic Materials (XLB) is well aware of.
Are their portfolio returns “transitory”?
Or are these “data points” all part of the numbers ultimately driving the narrative on why US Earnings already #accelerated to +45.7% year-over-year aggregate growth for Q121 EPS season to-date?
If you really thought the INVENTORY Cycle (which isn’t “mid”, it’s as Early Cycle as cycles get – same for EMPLOYMENT, in Cycle Time) was ending, I hope you didn’t short Freeport (FCX) when it corrected alongside Commodities in March.
And, maybe most importantly, I sincerely hope people didn’t short the NASDAQ as the #1 leading indicator for The Cycle (the Vol of Vol of QQQ Volatility) started breaking down in mid-March. That’s the only “mid” something signal I saw.
#Greenlights
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.54-1.73% (bullish)
SPX 4115-4216 (bullish)
RUT 2 (bullish)
NASDAQ 13,730-14,196 (bullish)
Tech (XLK) 140.02-144.61 (bullish)
VIX 15.60-19.12 (bearish)
USD 90.43-91.65 (bearish)
Oil (WTI) 60.73-64.23 (bullish)
Gold 1 (bearish)
Copper 4.15-4.53 (bullish)
Bitcoin 48,386-65,693 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
