Saaanta Claus Is Coming to Town: TLT Trade Update

Conclusion: We are firm believers in the year-end Santa Claus rally – in the long-end of the U.S. Treasury bond market.


Earlier today, Keith reopened a long position in the iShares Barclays 20+ Year Treasury Bond Fund (TLT) in our Virtual Portfolio. We’ve been trading around the volatility in long-term U.S. Treasury bonds with a bullish bias since 2Q and we continue to have conviction in our belief that U.S. growth is slowing from a cyclical perspective and structurally impaired from a secular perspective absent a shift towards strong dollar policy in D.C. This is a position that has worked throughout much of 2011 and our research suggests it will continue to work over the intermediate term.


Saaanta Claus Is Coming to Town: TLT Trade Update - 1


Today, our quantitatively-driven risk management process signaled to us that, while consensus remains hopeful for a year-end Santa Claus rally in equities (SENTIMENT), domestic and international economic growth is still slowing from an intermediate-term TREND perspective (DATA/CATALYSTS). But don’t just take our word for it:


“Rather than saying interest rates are too low, investors should be more concerned about what low rates are telling them about economic growth and expected returns on risky assets.”

- Robert Mead, Portfolio Manager at PIMCO


Treasuries are “expensive” for a reason and a great many stocks appear “cheap” for similar reasons. Moreover, as Keith penned in his Early Look this morning, Dynamic Risk Management (i.e. fluid asset allocation and trading the ranges) has been the winning strategy in 2011. Buy & hold isn’t the best short-to-intermediate term P&L risk management strategy with a VIX > 30 (yes, performance pressures do exist in our business). Eventually, the time will come to get really long of U.S. equities – our models are merely suggesting that time is not now.


Darius Dale



Saaanta Claus Is Coming to Town: TLT Trade Update - 2

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

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