Boom-Bust Barometer Biffs Badly

Yardeni’s Boom-Bust Barometer (BBB) pitched to 18-month lows last week (dotted red line below).

The BBB is comprised of the CRB industrial raw materials spot index divided by the four-week average of initial unemployment claims. It’s a fairly reliable stock market indicator which makes sense seeing as how rising raw material prices and a strengthening labor market typically equate to an environment that’s supportive of stocks, and vice-versa.

The BBB turned over and trended lower in the lead up to the 2015 market sell-off as well as the equity rout last Fall. Of course, there’ve been a few false signals such as the spike lower in 17’ but which was quickly reversed.

We’ll have to keep an eye on the BBB in the weeks ahead. The net-bullish sentiment reversal we saw recently in the AAII survey, along with the short-term oversold conditions of certain sectors (see semis), has likely bought this up-swing in the market a bit more time.

Looking past a few weeks out though I think it’s odds on we see another leg down in the market. Between the upcoming weak seasonals, decelerating global growth, escalating trade conflict, and stubbornly high consensus earnings estimates for Q2 onwards, there’s not a lack of catalysts to cause another major dislocation.

This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing. ~ David Tepper

It’s a good time to show some prudence, derisk some, and wait for another dislocation to buy in again.

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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.


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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.

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