“Don’t be trapped by dogma – which is living with the results of other people’s thinking.”
- Steve Jobs
You didn’t have to like Steve Jobs to like the results of his thinking. And if you #liked him, all the better. It’s better to find the good in people than spend your day whining with envy.
“But I’m so tired, said the entrepreneur…” and the artist said “well, I feel like death man – I hate being up this early.”
-The 5AM Club
I absolutely love being awake and grinding right now. It’s the best time of the day to, as Steve Jobs also said, “not let the opinions of others drown out your own inner voice.” While I’m not an “inner-voice” kind of guy, I’ll sub that for my process.
Back to the Global Macro Grind…
“But, but… KM, did you look at this … did you see that? How about this? This is what this guy is saying about that…”
I eventually get to having great conversations with our Institutional Clients about questions like those. I had a great one with 2 of the top PMs in Boston yesterday. They are absolutely part of my process. They simply don’t start until 11AM ET.
Between 4:30 and 7:10AM (hard stop), I’m speaking to no one other than my dog. His name is Boomer. He doesn’t have “feelings” about what I am measuring or mapping. He doesn’t care about what I tweet or write. He just wants to eat.
You may or may not believe this, but it only takes 35-50 minutes (hard stop on 50) to write this to you every morning.
It’s easy to write fast when A) you write often and B) you are writing about ROCs. The ROCs (rates of change) of the numbers is all I am measuring and mapping. I don’t wake up and crack open a beer and a valuation model.
What matters to me isn’t the valuations, averages, or opinions of things – it’s the particular things.
Yep, that’s it. And I’m obviously not doing this all on my own. I now have a 5 person Global Macro Team that’s grinding alongside me on different “shifts” where the bean counting needs to be done.
Dr. Drake does the night shift. Quadsevic (Drago Malesevic) does the morning Quad Shift with The Steinbomber (Josh Steiner). and Jonesy Buds, well, he just likes being on shifts!
What in particular is jumping off my notebook page this AM? I send out these Top 3 Things to Institutional Subs by 6AM:
Another episodic-and-non-TRENDING US Equity Vol Spike comes and goes – it’s still #Quad2…
- EUROPE – European Equities do not have the perf problems some equity books seem to keep having in America – our Top 2 Country Allocations (Germany and Switzerland = EWG & EWL) waived off yesterday’s US selloff, with both stock markets opening higher by +0.2-0.4% this morning – Swiss 10yr Yield up another +4bps to -0.16% = #Quad2
- ENERGY – standard correction from the top to the bottom end of my @Hedgeye Risk Ranges for both the Commodity and the stocks (XLE) in the last 3 days – step up and buy both here with immediate-term upside on WTI towards $66.96/barrel and $54.95 XLE
- VIX – episodic-and-non-TRENDING means people puke at the lows of the day, then the market bounces (1 pt off the low-end of my SPY range), and whoever mopped up the liquidity got paid. Front-month VIX just made a big lower-high within a Bearish @Hedgeye TREND and has immediate-term downside towards 14.98 (not a typo)
Here are 3 other things that could have been in my Top 3:
- BITCOIN – bouncing towards $40k this AM but that’s nothing but an irrelevant round number that might make a maxi “feel” better than bad for a few hours. Unless Bitcoin can recapture $49,001 it remains Bearish @Hedgeye TREND with immediate-term downside in my Risk Range towards $35,524
- CURVE – despite the uniquely American Equity investor panic yesterday, the Yield Curve actually steepened again to +151 basis points (10yr Yield minus the 2yr Yield). That continues to be bullish for our core #Quad2 Asset Allocations to a Steepener (IVOL) and the Financials (XLF). I’d buy more High Yield (HYG) here too
- COPPER – post the 1-2 day bounce off the low-end of my USD Index Risk Range, we register an unsurprising immediate-term TRADE #oversold signal at the low-end of Copper’s (CPER) Risk Range. So I’d be buying the damn dip in both CPER and FCX for the umpteenth time since going bullish on both in JUN of 2020
Wow. This format for an Early Look only took me 38 minutes. Maybe I should use it more often! As Steve Jobs also reminded all of us, our “time is limited, so don’t waste it living someone else’s life.”
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 1.59-1.73% (bullish)
SPX 4052-4251 (bullish)
RUT 2131-2274 (bullish)
Tech (XLK) 130.60-138.91 (bearish)
Energy (XLE) 51.24-54.95 (bullish)
Financials (XLF) 36.45-38.45 (bullish)
DAX 15049-15560 (bullish)
VIX 14.98-27.01 (bearish)
USD 89.65-90.83 (bearish)
Oil (WTI) 62.15-66.96 (bullish)
Nat Gas 2.88-3.14 (bullish)
Gold 1 (bearish)
Copper 4.56-4.82 (bullish)
Silver 26.68-28.57 (bullish)
AAPL 121-129 (bearish)
Bitcoin 35,524-48,896 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
