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28 Percent

Takeaway: Buying-The-Damn-Bubble #BTDB may not sound polite, but it's been working like a charm.

28 Percent - 881

 

The S&P 500 is up 401 points (+28%) 2013 year-to-date.

 

Gold is down $475 (-28%).

 

How's that for a macro market mirror image?

 

Buying-The-Damn-Bubble #BTDB may not sound polite, but it's been working like a charm. A stronger US Dollar and #RatesRising can perpetuate both of these moves further.

 

28 Percent - Gold vs SPX

 

Editor's note: This is an excerpt from Hedgeye CEO Keith McCullough's morning research. For more information on how you can become part of the Hedgeye Revolution click here.



10 Bullish, 10 Bearish Trends

Takeaway: What a year it’s been.

Editor's note: This is a brief excerpt from Hedgeye CEO Keith McCullough's Morning Newsletter. Click here to learn more about how you can become a subscriber. To subscribe to Daily Trading Ranges click here.

 

10 Bullish, 10 Bearish Trends - bo9

Since my kids are giving me an opportunity to laugh and smile this morning, I’ll keep the rest of my Christmas Eve note to just levels. It’s Daddy’s day off, allegedly.

 

Most of these intermediate-term bullish and bearish TRENDs aren’t new as of this morning. With sporadic ramps in fear, they’ve been trending for the better part of a year now. What a year it’s been.

 

Top 10 Bullish TRENDS @Hedgeye (and their immediate-term TRADE risk ranges)

 

1. UST 10yr Yield 2.88-2.95% (bullish)

2. SP500 1796-1835 (bullish)

3. Nasdaq 4047-4158 (bullish)

4. Germany’s DAX 9197-9533 (bullish)

5. UK’s FTSE 6539-6719 (bullish)

6. Japan’s Nikkei 15503-15989 (bullish)

7. British Pound 1.62-1.64 (bullish)

8. Euro (EUR/USD) 1.36-1.38 (bullish)

9. Brent Oil 109.89-112.12 (bullish)

10. Natural Gas 4.36-4.51 (bullish)

 

Top 10 Bearish TRENDS @Hedgeye (and their immediate-term TRADE risk ranges)

 

1. BOND (PIMCO Total Return Fund) 104.31-105.32 (bearish)

2. Long-term Treasuries (TLT) 102.08-104.77 (bearish)

3. Short-term Treasuries (SHY) 84.09-84.57 (bearish)

4. Emerging Markets (MSCI EM Index) 977-1009 (bearish)

5. Brazil’s Bovespa 49,308-52,172 (bearish)

6. US Equity Volatility (VIX) 12.56-14.91 (bearish)

7. Gold 1179-1221 (bearish)

8. Silver 19.01-19.97 (bearish)

9. Wheat 5.89-6.38 (bearish)

10. Japanese Yen (vs USD) 102.48-104.92

 

From our family and firm to yours, we’d like to thank you for your business and wish you both a very Merry Christmas and a Happy Holiday season.

 

Click here to join the Hedgeye Revolution.

 


Early Look

daily macro intelligence

Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.


Laugh, Smile

“There is nothing in the world so irresistibly contagious as laughter.”

-Charles Dickens

 

Charles Dickens started writing A Christmas Carol in 1843 as a progressive economic answer to the fear-mongering of the politicians of his age. Negativity, after all, is a long-standing and regressive (but effective) political strategy.

 

Sylvia Nasar quotes Dickens in Grand Pursuit - he called his story “a tale capable of twenty times the force - twenty thousand times the force of a political pamphlet.” The narrative “argues the economic historian James Henderson, is an attack on Malthus… an England characterized by New world abundance rather than Old World scarcity.” (Nasar, pg 7)

 

New versus old. Rich versus poor. These are timeless realities of life. But they don’t always have to oppose one another. Leaders, across centuries, have found a positive alternative to perdition’s path. This time was not “different.” There was no “new normal” either. Like laughter, the truth is contagious. And the truth is that patterns of human behavior and business cycles repeat.

 

Back to the Global Macro Grind

 

The SP500 and Gold are up 401 points (+28.1%) and down $475 (-28.3%), respectively for 2013 YTD. Depending on who you are talking to, that reality will either make them laugh or cry!

 

As Dickens wrote in A Christmas Carol, “no space of regret can make amends for one life’s opportunity misused.” And oh boy was investing in growth (and shorting fear) quite the opportunity.

 

Since my kids are giving me an opportunity to laugh and smile this morning, I’ll keep the rest of my Christmas Eve note to just levels. It’s Daddy’s day off, allegedly.

 

Top 10 Bullish TRENDS @Hedgeye (and their immediate-term TRADE risk ranges)

 

1. UST 10yr Yield 2.88-2.95% (bullish)

2. SP-1835 (bullish)

3. Nasdaq 4047-4158 (bullish)

4. Germany’s DAX 9197-9533 (bullish)

5. UK’s FTSE 6 (bullish)

6. Japan’s Nikkei 159 (bullish)

7. British Pound 1.62-1.64 (bullish)

8. Euro (EUR/USD) 1.36-1.38 (bullish)

9. Brent Oil 109.89-112.12 (bullish)

10. Natural Gas 4.36-4.51 (bullish)

 

Top 10 Bearish TRENDS @Hedgeye (and their immediate-term TRADE risk ranges)

 

1. BOND (PIMCO Total Return Fund) 104.31-105.32 (bearish)

2. Long-term Treasuries (TLT) 102.08-104.77 (bearish)

3. Short-term Treasuries (SHY) 84.09-84.57 (bearish)

4. Emerging Markets (MSCI EM Index) (bearish)

5. Brazil’s Bovespa 49,308-52,172 (bearish)

6. US Equity Volatility (VIX) 12.56-14.91 (bearish)

7. Gold 1179-1221 (bearish)

8. Silver 19.01-19.97 (bearish)

9. Wheat 5.89-6.38 (bearish)

10. Japanese Yen (vs USD) 102.48-104.92

 

Most of these intermediate-term bullish and bearish TRENDs aren’t new as of this morning. With sporadic ramps in fear, they’ve been trending for the better part of a year now. What a year it’s been.

 

From our family and firm to yours, we’d like to thank you for your business and wish you both a very Merry Christmas and a Happy Holiday season,

 

KM

 

Keith R. McCullough
Chief Executive Officer

 

Laugh, Smile - Chart of the Day

 

Laugh, Smile - Virtual Portfolio


Merry Xmas Bulls

Client Talking Points

YEN

The Burning Yen is making a fresh year-to-date low of 104.33. Naturally, the Nikkei is making a fresh 6-year closing high on that at 15,589. Nikkei is up over 55% year-to-date. Bottom line is get USD/YEN right, you get Japanese stocks right. What's that? The US Dollar is up another +20 basis points this morning? Exactly. 

10YR UST

It's a fresh 3-month high for #RatesRising up to 2.94%. We are testing the top-end of my immediate-term 2.88-2.95% risk range. Bond outflows (equity inflows) are going to be real tough to fight in January. We are short Pimco’s BOND.

SPY

With the S&P 500 up +401 points year-to-date, it’s a Merry Christmas Eve! Higher-lows and higher-all-time-highs are bullish, until they are not. While buying-the-damn-bubble #BTDB may not sound polite, it is what has been working. A stronger US Dollar and #RatesRising can very much perpetuate that further. SPX risk range is 1796-1835.

Asset Allocation

CASH 45% US EQUITIES 15%
INTL EQUITIES 15% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 25%

Top Long Ideas

Company Ticker Sector Duration
FXB

Our bullish call on the British Pound was borne out of our Q4 Macro themes call. We believe the health of a nation’s economy is reflected in its currency. We remain bullish on the regime change at the BOE, replacing Governor Mervyn King with Mark Carney. In its October meeting, the Bank of England voted unanimously (9-0) to keep rates on hold and the asset purchase program unchanged.  If we look at the GBP/USD cross, we believe the UK’s hawkish monetary and fiscal policy should appreciate the GBP, as Bernanke/Yellen continue to burn the USD via delaying the call to taper.

WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

GOLD: pathetic bear mkt bounce of +0.1%, -28.3% YTD @KeithMcCullough

QUOTE OF THE DAY

You really have to love yourself to get anything done in this world. -Lucille Ball

STAT OF THE DAY

Nine-in-ten Americans say they celebrate Christmas, and three-quarters say they believe in the virgin birth of Jesus. But only about half see Christmas mostly as a religious holiday, while one-third view it as more of a cultural holiday. Virtually all Christians (96%) celebrate Christmas, and two-thirds see it as a religious holiday. In addition, fully eight-in-ten non-Christians in America also celebrate Christmas, but most view it as a cultural holiday rather than a religious occasion. (Pew)


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