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Non-Idle Easing

This note was originally published at 8am on May 19, 2015 for Hedgeye subscribers.

“Trouble springs from idleness, and grievous toil from needless ease.”

-Benjamin Franklin

 

Not to be confused with Eurocrats who have recently returned from their monthly vaca, I’m pretty sure Ben Franklin was talking about lazy Americans who spend their time doing nothing.

 

They’re back! This morning’s macro market moves have nothing to do with central planners standing idle. Needless easing, you say? Who cares what we say? They say they need moarrr cowbell!

 

With both the European and Chinese economies now slowing, at the same time, there is only one play in their gravity-smoothing playbook for that. Must ease, faster.

 

Non-Idle Easing - Draghi cartoon 03.31.2015

 

Back to the Global Macro Grind

 

On The Macro Show yesterday (new daily video product we’re launching on Thursday) I kept asking my man Darius Dale, “where’s Draghi?” With both European stock and bond markets under pressure, I figured he’d re-appear…

 

I figured wrong…

 

Instead of Draghi coming back from the beaches with a bazooka, he sent in the Frenchman. Who’s the French guy? As in The Lefty Economist, Benoit Coeure. This guy hails from L’Ecole Polytechnique and the Paris Club de creditors. He’s big time.

 

And a big time headline he provided, indeed!

 

“Ze ECB is going to front-load ze QE” -Coeure

 

That’s code for we’re going to get back to Burning Euros and buying bonds, so you, little yield chasing man, better get out of your idle bed and start buying stocks, fast! Here’s what Global Macro markets did on that:

 

  1. Euro -1.1% (vs. USD) to $1.11 after tapping the top-end of our $1.10-1.14 risk range last week
  2. EuroStoxx50 +2.1% in a straight line off last week’s oversold lows
  3. German Stock market (DAX) +2%, leading gainers, after a -2.2% drop on Up Euro last week
  4. US Dollar up +1% (from 1-month lows)
  5. Commodities mostly down on the inverse correlation move to USD

 

Oh, and not to be confused with centrally planned markets, there was the actual European economic news:

 

  1. German ZEW sentiment for April fell to YTD lows of 41.9 vs. 53.3 last
  2. Eurozone inflation for April clocked in at 0.0% y/y; wow was that Policy To Inflate successful!
  3. UK CPI -0.1% year-over-year in April (PPI -1.7%) was the 1st deflationary report since 1960

 

That would be the year 1960, not some moving monkey level in the SP500.

 

Ah, wasn’t local life in America grand back then. That’s when the front-page of the NY Times would trumpet a young President by the name of John F. Kennedy and his #StrongDollar, Strong America message…

 

Newsflash: this is not the 1960s

 

This is a worldwide growth slow-down. It’s getting more volatile by the day, week, and month as central planners struggle with realizing the output of their currency devaluation policies to inflate – economic stagnation.

 

In other gravity-bending news, China’s slowdown continues and so does the “policy response” to “stimulate. The Shanghai Comp Casino ripped another +3.1% overnight to +36.7% YTD on “easing requirements for corporate bond issuance.”

 

You don’t have your 401k or clients in “China” as Chinese growth slows at a faster rate than its population is aging? What is wrong with you? Don’t stand idle. Get a Chinese broker and a margin account already. This is easy. Grievous toil be damned.

 

Our immediate-term Global Macro Risk Ranges (with intermediate term TREND views in brackets) are now:

 

UST 10yr Yield 1.96-2.32% (bearish)

SPX 2107-2139 (bullish)
RUT 1236-1259 (bullish)
Nikkei 19589-20056 (bullish)
VIX 11.97-15.44 (bullish)
USD 92.99-95.61 (neutral)
EUR/USD 1.10-1.15 (neutral)
YEN 118.81-120.78 (bearish)
Oil (WTI) 55.99-61.39 (bullish)

Natural Gas 2.78-3.10 (bullish)

Gold 1203-1238 (bullish)

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Non-Idle Easing - z 05.19.15 chart


TODAY AT 1PM: JUNE CRUISE PRICING CONF CALL - CCL F2Q PREVIEW

Takeaway: Is Carnival's brand resurgence in the Caribbean enough to counter softening prices in Europe?

The Hedgeye Gaming, Lodging, and Leisure team will host a conference call TODAY AT 1PM to discuss the latest findings from our proprietary cruise pricing database.  

 

Watch the presentation live below or contact your Hedgeye salesperson for the dial-in details.

 

Points of discussion include:

  • Pricing pivots (RCL,CCL, NCLH) for June 2015
  • Europe softer again
  • CCL F2Q preview and FY 2015 outlook:
    • Stronger Caribbean 
      • Carnival brand exhibiting strength
      • Can the momentum extend into the fall/winter season? 
    • Soft Europe summer pricing could impact earnings 
      • Costa discounting: is it a delayed reaction to Tunisia or something else?  
      • Germany: TUI vs AIDA
      • River Cruise pressures
      • Blame MSC?
      • And more...
  • New ship premiums

The Macro Show Replay | June 2, 2015

 


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.28%
  • SHORT SIGNALS 78.51%

VIDEO: Let's Make a Deal! A Healthcare Acquisition Discussion with Tom Tobin | $ATHN $HOLX $MD

Hedgeye Healthcare Sector Head Tom Tobin and Analyst Andrew Freedman hosted a live Q&A session Tuesday at 11:00AM ET, watch the replay below. 

 

They discussed key takeaways from our conversation with a Teleradiology Industry Executive about MD's recent acquisition of vRAD. They also provided updates to our HOLX and ATHN trackers.

 

 


Invite | Avian Flu ― Thought Leader Call with Dr. Thomas Elam

Takeaway: In this call we will discuss what losing 25% of your breaking eggs supply will do to food and restaurant industry supply chains.

Please join us on June 3, 2015 at 11:00am EST for a thought leader call on the Avian Flu (AI) and the effect it is having on the food and restaurant industries with Dr. Thomas Elam.

 

AI has reached epidemic levels and as we have been keeping you updated, we are bringing in a thought leader to speak to the affects AI is having on the food and restaurant industry. 

 

Dr. Thomas Elam, President of FarmEcon LLC will be meeting with us to discuss the topic and provide his insights that have been built up over his 40 year career. Dr. Elam has been recognized for his knowledge on the industry in numerous publications and written in-depth research on the topic. Dr. Elam brings a real business mind to the conversation, having been a professor of both economics and statistics. His education includes a BS degree in Economics with a minor in mathematics from Union University, Jackson, TN (1969), he also earned MS (1971) and PhD (1973) degrees in Agricultural Economics from the University of Tennessee, Knoxville.

 

Eggs are an important input for many products besides just table eggs, such as, baked goods, pasta, chocolate, ice cream, cosmetics, etc. The amount of companies that are currently being affected is large. The following is a selected list of affected publicly traded companies: MCD, PNRA, POST, CALM, HRL, TSN, DIN, ADM, GIS, K, DNKN, NESN, BDBD.

 

In this call we will discuss what losing 25% of your breaking eggs supply will do to food and restaurant industry supply chains and when it will make an impact on the bottom line.

 

Call details and materials to be provided on the morning of the call.

 

If you have any questions heading into the call please let us know.

 

Howard Penney

(O)

(E)

 


Invite | Avian Flu ― Thought Leader Call with Dr. Thomas Elam

Takeaway: In this call we will discuss what losing 25% of your breaking eggs supply will do to food and restaurant industry supply chains.

Please join us on June 3, 2015 at 11:00am EST for a thought leader call on the Avian Flu (AI) and the effect it is having on the food and restaurant industries with Dr. Thomas Elam.

 

AI has reached epidemic levels and as we have been keeping you updated, we are bringing in an thought leader to speak to the affects AI is having on the food and restaurant industry. 

 

Dr. Thomas Elam, President of FarmEcon LLC will be meeting with us to discuss the topic and provide his insights that have been built up over his 40 year career. Dr. Elam has been recognized for his knowledge on the industry in numerous publications and written in-depth research on the topic. Dr. Elam brings a real business mind to the conversation, having been a professor of both economics and statistics. His education includes a BS degree in Economics with a minor in mathematics from Union University, Jackson, TN (1969), he also earned MS (1971) and PhD (1973) degrees in Agricultural Economics from the University of Tennessee, Knoxville.

 

Eggs are an important input for many products besides just table eggs, such as, baked goods, pasta, chocolate, ice cream, cosmetics, etc. The amount of companies that are currently being affected is large. The following is a selected list of affected publicly traded companies: MCD, PNRA, POST, CALM, HRL, TSN, DIN, ADM, GIS, K, DNKN, NESN, BDBD.

 

In this call we will discuss what losing 25% of your breaking eggs supply will do to food and restaurant industry supply chains and when it will make an impact on the bottom line.

 

Call details and materials to be provided on the morning of the call.

 

If you have any questions heading into the call please let us know.

 

Howard Penney

(O)

(E)

 


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