prev

Fed Powers

“The powers delegated by the proposed Constitution to the federal government are few and defined.”

-James Madison

 

In other news, one of Bloomberg’s leading headlines this morning takes the other side of Madison’s Federalist Papers: “Yellen Poised to Rival Obama with Financial Power.” Isn’t that just terrific!

 

Have no #EOW (end of world) fear, yet. There are plenty of voices in America (and abroad) who still believe that an un-elected, un-checked, and un-accountable Federal Reserve is about to meet its maker – The People.

 

“Unlike the modern Statist, who defies, ignores, or rewrites the Constitution for the purpose of evasion, I propose that we, the people, take a closer look at the Constitution for our preservation.” –Mark R. Levin, The Liberty Amendments (pg 12)

 

Back to the Global Macro Grind

 

I’m not a Tea Party person, but I often wonder why more dogmatic Democrats don’t show “folks” like Mark Levin some love. Some of these Constitutionalists hate the Republican party more than Dems do!

Irrespective of your politics or Sox/Cards affiliation, every morning in America is a great one where we can “take a closer look at the Constitution” and the un-precedented power both Bush and Obama have put in the hands of Bernanke and Yellen.

 

I read Levin’s new book in 8 hours. At a bare minimum, it was worth my time to re-realize what I didn’t remember about the US Constitution. At a maximum, it made me think. Unless Americans want their currency to burn, Venezuelan style, they better start thinking about this, and fast, too.

 

Last week’s US #GrowthSlowing signals in equities we’re definitely considering what Down Dollar, Down Rates means:

  1. Slow-Growth Indices led last week’s US stock market strength: Utilities (XLU) +2.0%, REITS +1.8%, MLPs +1.7%
  2. Pro-Growth Indices flashed their 1st major negative divergence of 2013: Russell2000 +0.3%, Financials (XLF) -0.2%

If you broaden your vantage point to currencies and commodities, you can see the causal Fed factor at work here:

  1. US DOLLAR: down another -0.6% last wk and down -3.4% in the last 3 months to now NEGATIVE -0.7% YTD
  2. GOLD: up another +2.7% last wk and up +1.7% over the same 3 month period as Mr. Market front-runs the Fed

All the while, what the Fed is really sponsoring here (volatility instead of price stability) flashed its 1st major divergence versus the “US stock market at all-time highs” thingy in 2013. Stocks up = VIX up.

 

Not to be confused with every other US equity market rally of 2013 that we were long of (we’re short this one):

  1. US Equity Volatility (VIX) is making a series of higher-lows (instead of lower-lows) now
  2. The 11-handles that the VIX saw in both March and August of 2013 were aligned with US #GrowthAccelerating

No, this has nothing to do with being a Republican or Democrat. It has nothing to do with social issues either. It has everything to do with Mr. Market’s expectations of what causal impact the Fed’s “no-tapering” decision could have on the slope of US economic growth.

 

To review US economic growth’s slope in 2013:

  1. #GrowthAccelerating: Q4 2012 GDP of 0.14% accelerated to +2.48% by Q2 of 2013
  2. ISM and PMI “New Orders” pinned 60-handles in Q3 of 2013
  3. The first batch of OCT 2013 weekly and monthly US economic data has slowed, sequentially

“Sequentially” is an important word. How many of your favorite political market/econ pundits could even tell you what it means? *Hint: slope of the line.

 

And away from this week’s FOMC decision to pander to the Bond Bull Lobby, you’ll be getting more of what you saw in the US Consumer Confidence (U of Michigan survey) last week (73.2 OCT vs 77.5 SEP, #GrowthSlowing). Here’s the Macro calendar:

  1. Thursday: Chicago PMI for October should slow sequentially from September’s 55.7
  2. Fiday: ISM for October should slow sequentially from September’s 56.2

I know. Who cares? It’s all about the Fed right? Yeah, right.

 

More like it’s all about your investing Style Factors. To get those right, you need to get the slope of these growth lines right.

 

And if, god forbid, we take a few hours to consider the Constitutional conflict of interest in the Fed trying to “smooth” things embedded in the line (like gravity and/or growth), we might actually drive ourselves right nuts.

 

I can get nuts. I felt nuts selling at the all-time highs of October 2007 too.

 

Our immediate-term Risk Ranges are now as follows:

 

UST 10yr Yield 2.44%-2.60%

SPX 1

DAX 8

VIX 11.59-14.96

USD 78.72-79.71

Gold 1

 

Best of luck out there this week,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Fed Powers - Chart of the Day

 

Fed Powers - Virtual Portfolio


October 28, 2013

October 28, 2013 - Slide1

 

BULLISH TRENDS

October 28, 2013 - Slide2

October 28, 2013 - Slide3

October 28, 2013 - Slide4

October 28, 2013 - Slide5

 

BEARISH TRENDS

October 28, 2013 - Slide6

October 28, 2013 - Slide7

October 28, 2013 - Slide8

October 28, 2013 - Slide9

October 28, 2013 - Slide10

October 28, 2013 - Slide11

 


real-time alerts

real edge in real-time

This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.

THE M3: S'PORE EXCLUSIONS

THE MACAU METRO MONITOR, OCTOBER 28, 2013

 

 

175,680 EXCLUDED FROM SINGAPORE'S TWO CASINOS Strait Times

The number of people who are not allowed to enter Singapore's two casinos has reached a high of 175,680.  This is almost four times the 47,178 placed under exclusion orders in June 2011 - the first time such figures were released after the safeguard against problem gambling was introduced four years ago.


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – October 28, 2013


As we look at today's setup for the S&P 500, the range is 36 points or 1.18% downside to 1739 and 0.87% upside to 1775.                              

                                                                                                 

SECTOR PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

EQUITY SENTIMENT:

 

THE HEDGEYE DAILY OUTLOOK - 10                                                                                                                                                                  

 

CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.21 from 2.21
  • VIX closed at 13.09 1 day percent change of -0.83%

MACRO DATA POINTS (Bloomberg Estimates):

  • 9:15am: Capacity Utilization, Sept., est. 78.0% (prior 77.8%)
  • 10am: Pending Home Sales m/m, Sept., est. 0.0% (prior -1.6%)
  • 10:30am: Dallas Fed Manufacturing , Oct., est. 9 (prior 12.8)
  • 11am: Fed to purchase $4.25b-$5.25b in 2017-2018 sector
  • 11:30am: U.S. to sell $34b 3M bills, $30b 6M bills
  • 1pm: U.S. to sell $32b 2Y notes
  • 2pm: Monthly Budget Stmt, Sept., est. $67.0b (prior $75.2b)

GOVERNMENT:

    • House, Senate in session
    • FCC discusses rural comms., 700MHz commer. spectrum, 11:30am
    • U.S. Mortgage Bankers Assn annual convention; speakers include former President George W. Bush, Fannie Mae CEO Timothy Mayopoulos, Freddie Mac CEO Don Layton, CFPB Director Richard Cordray, Sen. Elizabeth Warren, D-Mass.

WHAT TO WATCH:

  • JPMorgan to pay $5.1b to settle w/ Fannie, Freddie: FHFA
  • Provenge maker Dendreon said to be seeking takeover offers
  • Obamacare insurance websites limited by Verizon data failure
  • Snapchat financing round may value co. at $3.5b: AllThingsD
  • Facebook said to be rebuffed by Snapchat over possible deal
  • China signals “unprecented” policy changes at Plenum
  • Pension funds move into reinsurance’s cat risk business
  • DirecTV, Time Warner Cable said to consider Aereo-type services
  • Disney to show new cartoon through iPad first, NYT says
  • Numericable said to seek IPO valuation of up to $8.3b
  • Twitter IPO test-run successful, WSJ says, citing NYSE
  • GM looking to expand lead in China with Chevy SUVs
  • Ford CEO doesn’t regret conservative China approach: SCMP
  • Idaho debates use of private prisons, WSJ says
  • U.K. storm leaves 220k homes w/o power: U.K. Energy Network
  • “Bad Grandpa” takes first place at N. Am. wknd box office
  • Retail sales probably slowed in Sept.: U.S. Economy Preview
  • Fed Meeting, BOJ, Iran Talks, Apple: Wk Ahead Oct. 26-Nov. 2

AM EARNS:

    • Biogen Idec (BIIB) 6:30am, $2.09
    • CNA Financial (CNA) 6am, $0.76
    • Loews (L) 6am, $0.77
    • Merck (MRK) 7am, $0.87 - Preview
    • Roper Industries (ROP) 7am, $1.45
    • Scorpio Tankers (STNG) 7:56am, $0.01
    • Tenneco (TEN) 8am, $0.94

PM EARNS:

    • Allison Transmission Holdings (ALSN) 4:01pm, $0.38
    • American Capital Agency (AGNC) 4:01pm, $0.81
    • Amkor Technology (AMKR) 4:09pm, $0.10
    • Apple (AAPL) 4:30pm, $7.91
    • Arch Capital Group (ACGL) 4:01pm, $0.92
    • CNO Financial Group (CNO) 4:03pm, $0.28
    • Edwards Lifesciences (EW) 4:01pm, $0.66
    • Extra Space Storage (EXR) 4pm, $0.52
    • FMC (FMC) 4:15pm, $0.84
    • General Growth Properties (GGP) 4:01pm, $0.28
    • Hartford Financial Services (HIG) 4:15pm, $0.84
    • HealthSouth (HLS) 4:30pm, $0.43
    • Herbalife (HLF) 4:10pm, $1.14
    • Integrated Device Technology (IDTI) 4:01pm, $0.08
    • Macerich (MAC) Aft-mkt, $0.83
    • Masco (MAS) 5:09pm, $0.25
    • Norwegian Cruise Line (NCLH) 4pm, $0.85
    • Oceaneering International (OII) 5:01pm, $0.94
    • Olin (OLN) 6pm, $0.64
    • Plum Creek Timber (PCL) 4:04pm, $0.42
    • PMC-Sierra (PMCS) 4:05pm, $0.10
    • Riverbed Technology (RVBD) 4:05pm, $0.23
    • Seagate Technology (STX) 4:01pm, $1.31 - Preview
    • Titan International (TWI) 4:30pm, $0.25

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Copper Rises for Third Day on Speculation Fed to Keep Stimulus
  • Tin Advancing 8% for BNP as Indonesia Spurs Swings: Commodities
  • Brent Rises From 11-Week Low Before Federal Reserve Meeting
  • Gold Swings Near Five-Week High Before Fed Begins Policy Meeting
  • Russia Cuts Gold Assets for 1st Time in Year as Prices Drop
  • Palm Oil Gains as Much as 0.4% to 2,454 Ringgit, Erasing Losses
  • LME Copper Premiums at Record High as Inventories Fall: BI Chart
  • Crop Yields May Be Curbed by Australia Frost, GrainCorp Says
  • Stocks Top Gold by Most Since ’97 on Fed Delay: Chart of the Day
  • China Refinery Boom Cuts Margins for Asia Rivals: Energy Markets
  • Zimbabwe Considering Structure of International Mining Bond
  • Palm May Rally on Inverse Head-and-Shoulders: Technical Analysis
  • Indonesia Coal Drowning Seaborne Market, Relief May Be Ahead
  • Rubber Gains on Weaker Yen, Optimism Chinese Demand Will Rise

THE HEDGEYE DAILY OUTLOOK - 5

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 6

 

GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 

 


THE WEEK AHEAD

The Economic Data calendar for the week of the 28th of October through the 1st of November is full of critical releases and events.  Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.

 

THE WEEK AHEAD - week


the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

next