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ICI Fund Flow Survey, Refreshed

Takeaway: In the most recent week, domestic equity mutual funds had drawdowns with fixed income taking the baton as the more stable asset class.

Editor's Note: This is a research note originally published March 27, 2014 by Hedgeye’s Financials Jonathan Casteleyn & Joshua Steiner. For more information on how you can subscribe to Hedgeye, please click here.
 ICI Fund Flow Survey, Refreshed - NYSE  1

 

Investment Company Institute Mutual Fund Data and ETF Money Flow

 

In the most recent week, while fixed income inflow wasn't historically impressive considering the significant inflows in the beginning of last year, bonds have clearly been the more stable asset class year-to-date considering declining equity trends especially within domestic equity funds recently:

 

Total equity mutual funds produced the first week of net outflow in 6 weeks with $968 million of net redemptions, a deceleration from the $3.1 billion inflow the week prior. The $968 million outflow was caused by domestic fund losses during the most recent 5 day period ending March 19th, with $3.8 billion flowing out of U.S. equity funds versus $2.8 billion that flowed into international stock funds. The 2014 running weekly average inflow for equity mutual funds is now $4.3 billion, an improvement from the $3.0 billion weekly average inflow for 2013. 

 

Fixed income mutual funds continued improving fund flow trends for the week ending March 19th with $2.4 billion flowing into all fixed income funds. The breakout of improving bond fund inflow amounted to $2.2 billion into taxable products and a $237 million inflow into tax-free or municipal products. The inflow into taxable products this week was 6th consecutive week of positive flow and the inflow into municipal or tax-free products was the 10th consecutive week of positive subscriptions. The 2014 weekly average for fixed income mutual funds now stands at a $1.5 billion weekly inflow, an improvement from 2013's weekly average outflow of $1.5 billion but a far cry from the $5.8 billion weekly average inflow from 2012 (our view of the blow off top in bond fund inflow).

 

ETFs experienced positive trends during the week, with a very strong week of subscriptions into stock ETFs with $10.1 billion in net inflow with bond ETFs experiencing a slightly above average inflow of $1.3 billion for the 5 day period. The 2014 weekly averages are now a $620 million weekly inflow for equity ETFs and a $926 million weekly inflow for fixed income ETFs. 

 

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a positive $5.4 billion spread for the week ($9.2 billion of total equity inflow versus the $3.8 billion inflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.2 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.4 billion (negative numbers imply more positive money flow to bonds for the week). 

 

Mutual fund flow data is collected weekly from the Investment Company Institute (ICI) and represents a survey of 95% of the investment management industry's mutual fund assets. Mutual fund data largely reflects the actions of retail investors. Exchange traded fund (ETF) information is extracted from Bloomberg and is matched to the same weekly reporting schedule as the ICI mutual fund data. According to industry leader Blackrock (BLK), U.S. ETF participation is 60% institutional investors and 40% retail investors.   

 

ICI Fund Flow Survey, Refreshed - ICI chart AA

 

ICI Fund Flow Survey, Refreshed - ICI chart BB

 

Most Recent 12 Week Flow in Millions by Mutual Fund Product

 

ICI Fund Flow Survey, Refreshed - ICI chart 1

 

ICI Fund Flow Survey, Refreshed - ICI chart 2

 

ICI Fund Flow Survey, Refreshed - ICI chart 3

 

ICI Fund Flow Survey, Refreshed - ICI chart 4

 

ICI Fund Flow Survey, Refreshed - ICI chart 5

 

Most Recent 12 Week Flow Within Equity and Fixed Income Exchange Traded Funds

  

ICI Fund Flow Survey, Refreshed - ICI chart 6

 

ICI Fund Flow Survey, Refreshed - ICI chart 7

 

Net Results

 

The net of total equity mutual fund and ETF trends against total bond mutual fund and ETF flows totaled a positive $5.4 billion spread for the week ($9.2 billion of total equity inflow versus the $3.8 billion outflow within fixed income; positive numbers imply greater money flow to stocks; negative numbers imply greater money flow to bonds). The 52 week moving average has been $7.2 billion (more positive money flow to equities), with a 52 week high of $31.0 billion (more positive money flow to equities) and a 52 week low of -$37.4 billion (negative numbers imply more positive money flow to bonds for the week).

 

ICI Fund Flow Survey, Refreshed - ICI chart 8 

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That’s a Wrap to Q1

Client Talking Points

JAPAN

The Yen is selling off into month-end, signaling immediate-term TRADE oversold at $103.29 versus the US Dollar.  Meanwhile, the Nikkei is signals immediate-term TRADE overbought in kind at 14,857. As growth data in Japan continues to slow, this is a good spot to short the Nikkei to start your Q2.

ITALY

Consumer price Tax Cuts go to  #StrongCurrency countries. The Italians are ringing the register on that front. Check out Italian CPI which is down to +0.4% year-over-year in March. Italy’s MIB Index is powering forward another +0.7% this morning, ramping it to over +14% year-to-date!

COMMODITIES

Take a look at the CRB Food Index. That’s  where the big absolute performance in Global Macro was at for Q114. It is up a monster +19.3% year-to-date. Meanwhile,  the US Dollar remains well below its $81.17 TAIL risk line of resistance. No, that’s not good for US consumers.

Asset Allocation

CASH 23% US EQUITIES 10%
INTL EQUITIES 12% COMMODITIES 20%
FIXED INCOME 15% INTL CURRENCIES 20%

Top Long Ideas

Company Ticker Sector Duration
OC

Construction activity remains cyclically depressed, but has likely begun the long process of recovery.  A large multi-year rebound in construction should provide a tailwind to OC shares that the market appears to be underestimating.  Both residential and nonresidential construction in the U.S. would need to roughly double to reach post-war demographic norms.  As credit returns to the market and government funded construction begins to rebound, construction markets should make steady gains in coming years, quarterly weather aside, supporting OC’s revenue and capacity utilization.

DRI

Darden is the world’s largest full service restaurant company. The company operates +2000 restaurants in the U.S. and Canada, including Olive Garden, Red Lobster, LongHorn and Capital Grille. Management has been under a firestorm of criticism for poor performance. Hedgeye's Howard Penney has been at the forefront of this activist movement since early 2013, when he first identified the potential for unleashing significant value creation for Darden shareholders. Less than a year later, it looks like Penney’s plan is coming to fruition. Penney (who thinks DRI is grossly mismanaged and in need of a major overhaul) believes activists will drive material change at Darden. This would obviously be extremely bullish for shareholders and could happen fairly soon driving shares materially higher.

Three for the Road

TWEET OF THE DAY

Since inflation slows growth, #YieldChasing continues - Utilities $XLU +1.2% last wk in a down tape to +8% YTD @KeithMcCullough

QUOTE OF THE DAY

"Do what you can, with what you have, where you are." - Theodore Roosevelt

STAT OF THE DAY

Japan’s industrial production fell in February, undershooting all forecasts by economists surveyed by Bloomberg News, as the first sales-tax increase since 1997 risks stalling recovery in the world’s third-biggest economy. Output fell 2.3% from the previous month, the steepest drop in eight months. (Bloomberg)


MONDAY MASHUP: PNRA, BLMN AND MORE

MONDAY MASHUP: PNRA, BLMN AND MORE - 1

 

Recent Notes

03/24/14  Monday Mashup: DNKN, WEN and More

03/26/14  PNRA: Expect Some Near-Term Pain

 

Events This Week

Wednesday, April 2

  • BWLD Analyst Day 10:30am EST

Chart Of The Day

The USDA reported last week the U.S. hog herd is at its lowest level in seven years, as cases of the fatal PEDv have tripled over the course of the last three months, killing nearly 8% of the herd. There is currently no cure for the virus, which has shown zero signs of slowing down.  Prices of spare ribs and bacon are expected to continue surging in the coming months.

MONDAY MASHUP: PNRA, BLMN AND MORE - chart of the day

 

Recent News Flow

Monday, March 24

  • SONC reported a strong 2QF14, delivering $0.07 adjusted EPS and beating bottom line estimates by approximately 18.5%.  System-wide sales increased +1.4% as company drive-in margins improved 80 bps.

Tuesday, March 25

  • RRGB acquired four Red Robin franchised restaurants from Swan Concepts Inc.  The restaurants are primarily in the upstate New York area.
  • WEN announced the completion of its system optimization initiative with the sale of 104 company owned restaurants in four primary markets.  The initiative is expected to lead to higher operating margins, stronger free cash flow generation and higher quality of earnings.
  • PNRA held its investor day and the results were generally disappointing.  The company reiterated its 2014 guidance, but the initiatives in place (mainly the rollout of Panera 2.0) will take much longer to materialize than the street had anticipated.  The company also declined to give 2015 guidance, due to a lack of visibility.

Wednesday, March 26

  • DRI Activist Barington Capital officially called for a new CEO at Darden in a letter to the independent board of directors and urged the board to begin looking for Clarence Otis’ replacement.
  • TXRH upgraded to buy at KeyBanc with a $30 PT.

Thursday, March 27

  • YUM Taco Bell launched breakfast nationwide.  The menu includes the Waffle Taco, A.M. Crunch Wrap, coffee and other products aimed at taking share from McDonald’s and other notable breakfast players. 
  • El Pollo Loco, a fast food chicken chain, is reportedly planning an IPO.  The company operates 400 restaurants primarily in the West.
  • IRG Chief Marketing Officer, Robin Ahearn, is stepping down to start her own marketing agency.  Ignite will not replace the position and plans to work with Ahearn in her new role.

Friday, March 28

  • MCD responded directly to Taco Bell’s breakfast rollout and controversial ad campaign by announcing a free two-week coffee promotion featuring its McCafe product line.  The Breakfast War hath begun.

US Macro Consumption

Last week was a bloody one for consumer stocks, with the XLY -2.1% vs the SPX down -0.5%.  Both casual dining and quick service stocks largely underperformed the XLY index for the second consecutive week.  The Hedgeye U.S. consumption model reverted back to neutral, from bullish, and is now flashing green on 6 out of 12 metrics.  We continue to believe the current environment is more conducive to select fast casual and quick service restaurants than casual dining restaurants.

MONDAY MASHUP: PNRA, BLMN AND MORE - 3

 

XLY Quantitative Setup

From a quantitative setup, the sector turned bearish last week on an intermediate-term TREND duration.

MONDAY MASHUP: PNRA, BLMN AND MORE - 4

 

Below we look at the performance of restaurant companies relative to the XLY and recent trends in earnings revisions estimates.

 

Casual Dining Restaurants

Top 5 Week-Over-Week Divergent Performances:

Positive Divergence: DRI +2.1%, EAT +1.9%, CBRL +1.3%, BAGL +1.3%, TXRH +0.6%

Negative Divergence: BBRG -5.1%, BWLD -3.5%, BJRI -3.4%, BLMN -3.4%, KONA -3.1%

MONDAY MASHUP: PNRA, BLMN AND MORE - 5

 

Notable 1-Month Earnings Revisions

Positive Revision: RUTH +2.8%, BWLD +0.2%

Negative Revision: BOBE -25.4%, RT -1.1%, DRI -1.0%, BLMN -0.9%, BJRI -0.6%

MONDAY MASHUP: PNRA, BLMN AND MORE - 6

 

Quick Service Restaurants

Top 5 Week-Over-Week Divergent Performances:

Positive Divergence: SONC +8.2%, MCD +4.0%, THI +2.1%, BKW +1.0%, YUM +0.7%

Negative Divergence: PNRA -5.8%, TAST -5.4%, CMG -5.1%, PLKI -3.7%, DNKN -3.3%

MONDAY MASHUP: PNRA, BLMN AND MORE - 7

 

Notable 1-Month Earnings Revisions

Positive Revision: WEN +0.9%, PZZA +0.8%, GMCR +0.4%, SONC +0.4%, JACK +0.3%

Negative Revision: PNRA -0.4%, MCD -0.3%, SBUX -0.3%

MONDAY MASHUP: PNRA, BLMN AND MORE - 8

 

 

Howard Penney

Managing Director

 

Fred Masotta

Analyst


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Just Charts: Multi-Level-Marketing Stocks Lift!

Consumer Staples outperformed the broader market last week, rising +0.6% versus the S&P500 at -0.5%. XLP is down -0.5% year-to-date vs the SPX at +0.5%.

 

For a fourth straight week, the XLP is bullish on immediate term TRADE and intermediate term TREND durations from a quantitative set-up. This is a material shift as the sector traded bearish TRADE and TREND for the majority of the year-to-date.

 

Just Charts: Multi-Level-Marketing Stocks Lift! - 1

 

The Hedgeye U.S. Consumption Model is also showing improvement, with 6 of the 12 metrics flashing green.

 

Just Charts: Multi-Level-Marketing Stocks Lift! - 2

 

Despite an improved outlook for the sector, we continue to believe that the group is facing numerous headwinds, including:

  • U.S. consumption growth is slowing as inflation rises, in-line with the Macro team’s 1Q14 theme of #InflationAccelerating
  • The economies and currencies of the emerging market – once the sector’s greatest growth engine – remain weak with the prospect of higher inflation in 2014 eroding real growth
  • The sector is loaded with a premium valuation (P/E of 19.4x)
  • Less sector Yield Chasing as Fed continues its tapering program
  • The high frequency Bloomberg weekly U.S. Consumer Comfort Index has not seen any real improvement over the past 6 months, and fell to -31.5 versus -29.0 in the prior week

Just Charts: Multi-Level-Marketing Stocks Lift! - 3

Just Charts: Multi-Level-Marketing Stocks Lift! - 4

Just Charts: Multi-Level-Marketing Stocks Lift! - 5

 

 

Top 5 Week-over-Week Divergent Performances:

Positive Divergence:  HLF 12.3%; NUS 10.7%; MKC 5.6%; DEO 5.3%; BUD 3.8%;

Negative Divergence:  POST -10.6%; JAH -4.3%; HAIN -4.3%; BNNY -3.2%; SAM -3.0%

 

 

Last Week’s Research Notes

 

Matt Hedrick

Food, Beverage, Tobacco, and Alcohol

 

Howard Penney

Household Products

 

(o)

 


Quantitative Setup
In the charts below we look at the largest companies by market cap in the Consumer Staples space from both a quantitative perspective and fundamental aspect where we can offer one.  As you will see over time, sometimes our fundamental view does not align with the quantitative setup (though not often).


BUD – finally recaptures the bullish TREND line of 103.44 support! We’ll see if it can hold the line and make higher-highs vs the 2013 yr end mark-up closing high

Just Charts: Multi-Level-Marketing Stocks Lift! - 6


DEO – looks nothing like BUD; still bearish TREND despite last week’s rally; TREND resistance overhead at $125.91

Just Charts: Multi-Level-Marketing Stocks Lift! - 7


KO – looks like DEO; bearish TREND resistance = $39.91

Just Charts: Multi-Level-Marketing Stocks Lift! - 8


PEP – holds its newly established bullish TREND line of $81.48 support; rally has come on weak volume relative to the ramp in volume we saw when the stock broke down in early FEB

Just Charts: Multi-Level-Marketing Stocks Lift! - 9


GIS – 3 consecutive weeks of a bullish TREND confirmed (with solid volume signals embedded in the breakout); TREND support = $50.74

Just Charts: Multi-Level-Marketing Stocks Lift! - 10


MDLZ – still clinging (barely) to bullish TREND with that support line = $33.88

Just Charts: Multi-Level-Marketing Stocks Lift! - 11


KMB – still the best looking name on this list – Bullish Formation with intermediate-term TREND support = $106.62

Just Charts: Multi-Level-Marketing Stocks Lift! - 12


PG – looks nothing like KMB – bearish TREND intact with resistance = $80.63

Just Charts: Multi-Level-Marketing Stocks Lift! - 13


MO – 3 straight weeks of confirmed bullish TREND breakout – volume signal not especially strong here but TREND support = $36.32

Just Charts: Multi-Level-Marketing Stocks Lift! - 14


PM – trying hard to not make lower-lows, but that hasn’t changed that this remains a bearish TREND ($82.92 resistance)

Just Charts: Multi-Level-Marketing Stocks Lift! - 15


LEISURE LETTER (03/31/2104)

TICKERS: PENN, MGM, RHP

 

EVENTS TO WATCH:  UPCOMING EARNINGS / CONFERENCES / RELEASES 

Wednesday, April 2

  • March ADP Employment report

Friday, April 4

  • March NFP report

Tuesday-Thursday, April 8-10

  • Mid-America Gaming Congress (Columbus, OH)

Wednesday, April 9

  • SHO Investor Day

Thursday, April 10

  • HST Investor Day

 

COMPANY NEWS

PENN - announced it submitted to the Commonwealth of Massachusetts an electronic payment of $25 million for the Plainridge Park Casino gaming license.

TAKEAWAY:  Well on the way to opening the doors, any effort to rescind gaming across Massachusetts will now be met with massive and extended litigation. 

                                  

MGM –  MGM CEO Murren noted: Las Vegas receives 40 million visitors a year; 20% are first timers, 18% from overseas. As for Japan, Murren expects a casino by 2020.  In Japan, 60% of tourists come from Singapore, Korea and China.

TAKEAWAY:  Setting the stage for a massive bidding war over the expected Tokyo Integrated Resort...

 

RHP – the Company entered into an agreement to purchase the property at 300 Broadway Street, Nashville.  The building houses the Opry Originals gift store on the ground level while 16,000 sq. ft. of total office space encompass the 2nd and 3rd floors of the property.

TAKEAWAY:  Sounds like a corporate HQ relocation is in the works…

 

Great Wolf – the Massachusetts Economic Assistance Coordinating Council last week awarded $17.2 million to Great Wolf for its first New England location – the redevelopment of a Holiday Inn with a Coco Key water resort in Fitchburg, MA (30 miles north of Worchester, MA).  Great Wolf will redesign and expand the water park from 25,000 square feet to 55,000 square feet, convert the expo center into 81 new hotel rooms, and rebrand the hotel. The total number of hotel rooms will be increased from 245 to 406.   Great Wolf Resorts anticipates the project will generate more than 400,000 visitors annually.

TAKEAWAY: Could a RE-IPO be in the planning?  Recall, Apollo took WOLF private in June 2012 for $7.85/share. The company currently operates 12 destinations and Fitchburg, MA will be their 13th location and Garden Grove, CA is scheduled to open in 2015. 

 

Thomas Cook – recorded a growth 2% in bookings for next summer, according to data accumulated up to March 15.  Thomas Cook has sold 50% of its programming for the season while it has not changed the capacity nor prices.  CEO Harriet Green said, "An increase in bookings for the summer, is encouraging. The winter business was satisfactory, despite the market disruption caused by the significant continuous riots in Egypt."

 

For the UK, bookings are +3% YoY over last year, with a 1% reduced capacity and a price drop of 2%.  In Continental Europe, bookings are +1%, with matched capacity and increased prices by 1%.  In the Nordic countries, sales are 2% above, with 3% more capacity but a reduction of rates of 2%.  For the winter program, Thomas Cook sold 93%, but the results have been very affected by Egypt.  Accumulated bookings are 4% below last year, with a reduced capacity of 5% and 1% higher prices.

TAKEAWAY:  Tour bookings are up for the summer but the pricing commentary is weak

 

INDUSTRY NEWS              

Macau / Zhuhai border crossing – a new e-channel, immigration lane featuring 23 automated immigration clearance and processing checkpoints opened.  The e-channel lane will reduce immigration wait times from up to 30 minutes to no more than 5 minutes. 

TAKEAWAY:  Having visited the Macau/Zhuhai border crossing, it reminds us of the San Diego/Tijuana border and immigration crossing but without the cars and 100x times the number of people.  Anything efforts to reduce processing time, simply increases time at the table and is a positive for the Mass gaming segment. 

  

New York Proposal 1 Gaming Expansion – New York’s Gaming Commission's Facility Location Board will put out requests for applications Monday for four privately owned casinos in three regions of the state: the Albany area, Catskills and Southern Tier.  Based on media reports, there are at least three bidders in each region who have expressed public intentions.  Each application comes with a $1 million fee to be used by the board to investigate each proposal. If the board doesn't use all the money, the remainder would be returned to the applicant.   The application process will end on June 30. To apply, a bidder “must illustrate to the board's satisfaction that local support has been demonstrated.

TAKEAWAY:  Very soon we will know the depth of interest in developing new casinos across New York.


MACRO

Chinese travel agents stop selling tickets to Malaysia Times of India
China's online ticketing sites (eLong, LY.com, Qunar, Mango) have stopped booking on flights going to Malaysia. This is the first major commercial backlash against Malaysia after Kuala Lumpur announced that there was no hope for passengers of the missing MH370 flight on March 24.  "We will continue the ban indefinitely until the Malaysian government and Malaysia Airlines release every piece of information they have in order to find out the truth about the missing flight as soon as possible," wrote eLong.

TAKEAWAY:  A widening rift in Malaysia-China relations could hurt Malaysian economy and potentially impact Singapore gaming.

 

China Macro - 1Q14 China GDP is expected to slow to 7.4% YoY (Bloomberg), the lowest since 1Q09 when GDP was 7.3%.  Chinese property prices are reportedly cooling with economic slowdown and lower level of bank interest in making new real estate loans. 

TAKEAWAY:  Not good economic news for Macau but not exactly awful. The Chinese economy would need to really hit the skids to slowdown the Macau juggernaut. 

 

Hedgeye remains negative on consumer spending and believes in more inflation.  Following  a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive.  

TAKEAWAY:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.


Overbought, Oversold

This note was originally published at 8am on March 17, 2014 for Hedgeye subscribers.

“A good laugh and a long sleep are the two best cures.”

-Irish Proverb

 

Indeed. Happy Saint Patty’s Day to you! For we Irish-Scottish-Canadian-American mutts, it’s a good day to wake up with a smile. My two month old daughter had a great big one on her face before I left home this morning. Life is good.

 

After signaling immediate-term TRADE oversold on Friday (Gold and VIX signaled overbought), US Equity Futures are smiling this morning too. And they should be – there’s nothing like reviving the animal spirits of a bubble that deflated last week.

 

So sell some of that Gold and buy yourself whatever you like. Amongst others, we’d go with Lorillard (LO), Owens Corning (OC), and T. Rowe Price (TROW). The two best cures for a down US stock market YTD are oversold signals and up futures!

 

Back to the Global Macro Grind

 

Immediate-term TRADE overbought and oversold signals are what they are – risk management tools that should help augment your investment process, no matter what your investment duration is…

 

Another way to think about this is what I call Fading Beta (or more commonly referred to as selling high and buying low). I get that “it is often that a person’s mouth broke his nose” (Irish Proverb!), so I’m not trying to be cute when I write it like that. It’s just what I try to do.

 

Here are some clean cut immediate-term TRADE overbought signals from Friday:

  1. Gold immediate-term TRADE overbought = $1385
  2. VIX (front month) immediate-term TRADE overbought = 17.99
  3. Bonds overbought (yields oversold) at 10yr UST yield = 2.62%

In other words, the #InflationAccelerating-slows-growth asset allocation of Long Gold, Bonds, and Fear was overbought at the following 2014 YTD gains:

  1. Gold +15.1% YTD
  2. Bonds (10yr Yield) -37 basis points YTD to 2.65%
  3. Fear (VIX) = +29.9% YTD

Sure, you could have very well broken your own nose banging it against a wall trying to get back to break-even in something like:

  1. Dow Jones Industrial Index -3.1% YTD
  2. US Consumer Discretionary Stocks (XLY) -1.5% YTD
  3. SP500 -0.4% YTD

But why the stress? Why not relax a little and buy your favorite US stocks when they are on sale? Reality is that this business isn’t that easy. We’re all stressed – and that’s the point about having a pint every now and then. Takes the ole’ edge off!

 

You could have bought stocks (twice) at the all-time bubble highs (intraday moves toward 1881 on the SP500) on both Friday March 6th and Tuesday March 11th. Or you could have bought them 40 S&P points lower on March 14th at 1841. There’s a difference.

 

#Timing matters. So do counter-consensus Global Macro Themes like #InflationAccelerating. Here’s the update on that asset allocation shift as of last week:

  1. CRB Food Index flat (in a down US equity market) last week at +15.3% YTD
  2. Lean Hogs up another +6.1% last wk to +27.7% YTD
  3. Coffee prices up another +0.8% last wk to +75.7% YTD

I know. I know. I’m focused too much on what humans eat and drink for breakfast. How about slow-growth-yield-chasing?

  1. Silver +2.4% last week to +10.5% YTD
  2. Utilities (XLU) +2.3% to +7.7% YTD
  3. REITS flat (in a down US Equity market wk) at +8.3% YTD

Yep, that’s the deal – and while you can’t eat a REIT, you can definitely pay your inflating rent, and like it. Or not. Oh yes, Mucker “where the tongue slips, it speaks the truth.”

 

So don’t confuse oversold signals in US Equities (or overbought signals in Gold, Bonds, Utilities, etc.) with a new narrative, because #InflationAccelerating and #GrowthSlowing in Q114 are still here to stay.

 

For those of us who can buy inflation protection, it’s fine. We just don’t want you to buy the all-time bubble highs on overbought signals. After all, as another Irish Proverb goes, “if you buy what you don’t need, you might have to sell what you do.”

 

Our immediate-term Global Macro Risk Ranges are now:

 

UST 10yr Yield 2.61-2.75%

SPX 1828-1867

Nikkei 14217-14898

VIX 15.01-18.34

USD 79.21-79.86

Gold 1351-1388

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Overbought, Oversold - Chart of the Day

 

Overbought, Oversold - Virtual Portfolio


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