A Dwindling Cash Buffer… [Dirty Dozen]

I don’t think you can consistently be a winning trader if you’re banking on being right more than 50 percent of the time. You have to figure out how to make money being right only 20 to 30 percent of the time.~  Bill Lipschutz via The New Market Wizards by Schwager

In this week’s Dirty Dozen [CHART PACK], we look at a broken housing market, more recessionary signals but constructive price action and sentiment tailwinds. We then dive into global steel demand and take a look at a producer that has broken out from a large base, plus more…

  1. Scores on the Doors… from BofA with highlights by me.


  1. This is good, but it’s also bad… The reversal in DM real estate is good because housing prices got too juiced too fast over the last two years and some air needed to be let out. It’s bad because lower home equity and frozen RE markets due to higher rates are going to put the squeeze on the consumer soon (chart via BofA).


  1. Earnings recession… BofA’s leading indicators suggest we should see earnings continue to follow in housing’s footsteps.


  1. This would be a first… Philly Fed’s Mfg Outlook Diffusion Index is at levels that have shortly preceded or coincided with a recession every single time over the last 60+ years.


  1. IG says so too… This chart shows that when the IG yield – CB Policy Rate has gotten this tight (or inverted) in the past, the economy tends to contract shortly thereafter (chart by Jim Reid via @boazweinstein).


  1. Excess no more… The primary reason we were bullish on US economic growth for the past year while the market was whining about an imminent recession, was excess consumer savings.

This was a considerable amount thanks to fiscal stimmies, which has kept the US econ resilient. Too bad this well will run dry by Fall (charts by Jim Reid via @boazweinstein).


  1. Too soon, Bears… This chart is from Jason Shapiro who’s a good follow on the twitters (@Crowded_Mkt_Rpt). It shows the 52w rolling average of Bulls vs Bears.


  1. Tape tells another tale… The tape continues to see great-looking sell setups fail and hold/reverse at key levels. This is not bearish action. So while there are plenty of fundamental reasons to be bearish, King Price is saying something else.


  1. AI by the numbers… charts via BofA.


  1. Picks and semis… I still stand by my secular semi-bull thesis which I outlined back in October of 2020 here.


  1. Steely-eyed… steel stocks have been surprising to the upside these past few months (check out ZEUS). One reason why is that infrastructure spending is coming back to many DM markets in a big way (charts via BBG).


  1. Cleveland Cliffs (CLF)… has broken out of a 6-year base and most recently a large bull pennant. The chart below is a monthly.

Thanks for reading.

Stay frosty and keep your head on a swivel.

Subscribe To Our Newsletter

Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.