monday, september 16th, 2024
Watch below. Please submit questions to QA.HedgeyeTV@Hedgeye.com
If you have any Hedgeye process questions, check out our resources at Hedgeye University. For any product questions, contact support@hedgeye.com
CLICK HERE to access today's slides.
broadcast summary (*Generated by ai, there may be some errors)
Key Takeaways
- Federal Reserve expected to cut rates by 50 basis points, but potential for only 25 bps cut remains
- Quad 4 economic conditions persisting, with gold up and copper down
- Foreign currency positions (long Euro, long Pound) remain attractive as Fed appears more dovish than other central banks
- Caution advised on equity markets due to potential volatility around Fed decision
Topics
Federal Reserve and Rate Cut Expectations
- Market pricing in 50 bps rate cut, shift from 25 bps expectation last week
- Potential for Fed to only cut 25 bps to maintain credibility
- Concern that 50 bps cut could signal economic emergency
- VIX setup not conducive to panic rate cut; bearish trend not yet confirmed
Economic Indicators and Market Conditions
- Quad 4 conditions persist: gold up, copper down, 2-year yield testing 3.50%
- China data shows continued slowdown: Industrial production 4.5% (from 5.1%), retail sales 2.1% (from 2.7%)
- U.S. retail sales data coming Tuesday; potential for strong number before Fed meeting
- Difficult base effects for retail sales in September and December 2024
Currency and Commodity Markets
- Long Euro and Pound positions attractive as Fed appears more dovish than ECB and BoE
- Bank of Japan unexpectedly hawkish, supporting Yen strength
- Oil (WTI) showing lower high at $71.19, well below trend of $77.91
- Silver "ripping" with potential to reach 5-year high above $32
Equity Market Dynamics
- S&P 500 near all-time highs, but 8:1 downside vs upside levels
- Tech sector up 8% last week after previous decline
- Defensive sectors (utilities, real estate) outperforming tech over 3-month period
- NVIDIA options activity suggests manipulation attempts
Investment Strategy
- 10 short positions added, mostly into Friday's close
- Caution advised on both upside and downside scenarios for Fed decision
- Long positions in investment-grade credit (LQD, IGLB, IGSB) maintained
- Signal Strength Stocks: changes include removal of RTO, SPHR, TGT; addition of DKNG
Next Steps
- Monitor Fed meeting and rate decision on Wednesday
- Watch for potential volatility in equity markets, especially NVIDIA
- Assess retail sales data on Tuesday for impact on Fed decision
- Consider defensive positioning and bond proxies in equity allocations
- Evaluate opportunities in silver and other commodities showing strength
