“My North Star is every event in the world affects some security and I try to imagine the world as it is today and then try and see if there’s some kind of seismic change going on and how the world might look in 18 months. And if it does look that way, what are the securities that would be priced very differently than they are now? I think a lot of investors live in the present, which is a disaster long term – it might work short term.” ~ Stanley Druckenmiller (h/t @CundillCapital)

Good morning! 

In this week’s Dirty Dozen [CHART PACK]  we discuss the latest —  very bearish — BofA Global Fund Manager Survey, we then talk about record global economic pessimism, a MAJOR Bull & Bear Buy Signal, a market pricing in a recession, why a recession won’t happen, improving Chinese mobility, pitch the bull case for a beaten-down former HF hotel, and talk about incoming reversion in EURUSD, plus more…

  1. Here’s the summary of the latest BofA Global Fund Manager Survey with highlights by me (takeaway: everyone is bearish and holding lots of cash).


  1. The “Charts of the Month” from the BofA FMS. Note, fund managers are the most underweight tech stocks they’ve been since Aug 06’


  1. And global growth optimism hit new record lows… 


  1. While concerns about financial market stability are at extremes last seen at the COVID bear market lows and right before the bottom of the GFC.


  1. BofA’s Bull & Bear Indicator triggered an official Buy Signal last week. Need the tape to confirm but we’ve got what looks like a double bottom on the major US  indices that should be good enough for at least a pop, if not a more enduring low.


  1. DB points out that this selloff is already well into pricing a recession…


  1. And it’s lasted a lot longer than your average correction, which is again, another sign the market is pricing in a recession. 


  1. HF manager @GavinSBaker made an interesting point on the twitters the other day, noting the stark difference in TTM EPS between now and the 2000 tech bubble. 


  1. A good majority of our problems such as supply chain issues and inflation are being exacerbated by the rolling lockdowns in China due to the continued reinforcement of their COVID-Zero policies. 

This has resulted in cities accounting for approximately 14% of GDP under “restricted” mobility, and another 52% of GDP under “limited” mobility according to DB. The good news though is that the worst of it looks to be over for now and if this continues it should lift tailwinds on inflation.


  1. Initial claims are putting in consecutive new highs which indicates that the labor market is flattening out. This will ease up pressure on the Fed in the coming months as they won’t have to be as concerned with an overheating labor market putting pressure on wages. We are of the belief that the Narrative Pendulum has swung to “Peak Hawkishness / Peak Inflation” concerns and we’re going to see it revert back over the next 12-months. 


  1. Sea Ltd. (SE) has fallen 85% from its 21’ all-time high. But it recently reversed (chart is a weekly) off of major support and it looks as though a temporary bottom might be in. The stock is the cheapest it’s ever been while its business has never been stronger. We’re still digging into this one since the last time we gave it a proper look was back in Nov 19’ when it was trading for 20-something a share (link here). Here’s a good overview of the company and the bull case for the stock (link here).


  1. We’ve been long the DXY this past month but recently started taking profits as momentum waned. Now we’re looking at maybe flipping and going short. Here’s some charts that are worth a look. 

The first one is a quarterly showing EURUSD at major 40-year support. Its monthly chart is also reversing off major support and deeply oversold with the May bar completely below its lower Bollinger Band. It has also put in 4 consecutive monthly bear bars, which is unusual. Our backtester shows there have only been 6 other instances. And each time led to an extended period of strong mean reversion over the following months

Lastly, EURUSD is putting in an inverted H&S bottom on the daily. Look for a break of the neckline. Not a bad spot to get long.

Thanks for reading.

Stay frosty and keep your head on a swivel.

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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.


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.