European Risk Monitor: Currency Strength Ahead of ECB and BoE Decisions

Position: Long British Pound (FXB)

 

As is typical for Mondays, we release our weekly European Risk Monitor. While risk continues to trend higher across Europe’s periphery, Greece experienced a noticeable inflection in sovereign cds late last week (see chart below). Despite the turn, we continue to stress that a restructuring of Greek public debt is a question of when, and not if, and therefore we expect cds and government bond yield charts to trend up and to the right for peripheral countries.

 

European Risk Monitor: Currency Strength Ahead of ECB and BoE Decisions - bankaa

 

Our European Financial CDS Monitor (below) shows that bank swaps across Europe were mostly tighter week-over-week, tightening for 31 of the 39 referenced entities and widening for 8.

 

This week we expect both the EUR and GBP to perform well against the USD as both the ECB and BoE continue to signal a hawkish stance on inflation going into interest rate decisions this Thursday. Meanwhile the USD continues to burn, with the US Dollar Index down another -1.4% week-over-week and down for the 14th week out of the last 18 as a credible plan to reduce US debt and deficits remains uncertain.

 

For more on our positioning on the GBP-USD, see Friday’s Early Look titled “Royal Awareness”.

 

Matthew Hedrick

Analyst

 

European Risk Monitor: Currency Strength Ahead of ECB and BoE Decisions - bank1

European Risk Monitor: Currency Strength Ahead of ECB and BoE Decisions - bank2


GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more