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Client Talking Points

VIX

They smashed cross-asset volatility on the Fed decision, and that makes a lot of sense to me as a narrowing of our FICC risk ranges (especially UST 10YR Yield and EUR/USD) is short-term bullish for asset prices, including stocks (Utilities) that look like bonds.

GOLD

Oh the love Gold has for the two-stroke Down Dollar, Down Rates move; being long this for the 1st time in a while felt like sitting on a hand grenade, so the +2.2% pop was appreciated; Gold diverged big from Copper, which is down another -1.1% this morning.

USD

Get the U.S. Dollar right, and you’ll certainly get less things wrong – important overbought signal was $1.14 EUR/USD and the risk range there is now 1.11-1.14, so keep that in mind, especially when risk managing your long Oil position (risk range WTI = 58.51-61.78).

 

**The Macro Show - CLICK HERE to watch today's edition at 8:30AM ET, Keith McCullough is back from London!

Asset Allocation

CASH 37% US EQUITIES 7%
INTL EQUITIES 13% COMMODITIES 13%
FIXED INCOME 28% INTL CURRENCIES 2%

Top Long Ideas

Company Ticker Sector Duration
PENN

Penn National Gaming will likely tee off on the bears with a strong Q2, upward 2015/2016 EPS revisions, and the start of a 2 year growth period. PENN’s stock has climbed 27% this year on stabilizing regional gaming revenues, transaction-fueled optimism (real estate) surrounding the regional gaming companies and proximity to the opening of the new Plainridge racino on June 24. So what will drive even more upside? More and better. We think regional gaming trends are even better than anticipated by the Street and Q2 earnings should be a solid beat even before Plainridge contributes.

ITB

Housing outperformed in the latest week alongside choppy price action in equities and further, extraordinary volatility in sovereign bond markets.  Fundamental data was light with weekly purchase applications data from the MBA the lone release of import for the industry.  The first, high-frequency update on purchase demand in June, however, was positive. Purchase demand rose +9.7% sequentially, taking the index to its strongest level in 2 years at reading of 214.3. On a year-over-year basis, growth accelerated for a  4th consecutive week to +14.6%. Inclusive of last weeks gain, demand in 2Q is tracking +14.3% QoQ and +13.4% YoY.

TLT

The market has been jockeying for positioning in front of next week’s policy statement from Janet Yellen. We believe Yellen signaling that she remains “data dependent” (i.e. repeats what she said at the March 18thmeeting) is the most probable outcome. To be clear, we remain the long-bond bulls (TLT, EDV, MUB). With that being said we aren’t claiming to be able to predict the outcome of next week’s meeting (sure we do have biases). What we do know is that Hedgeye estimates for growth and inflation shake out much lower against both consensus and central bank forecasts for the full year 2015 (remember that this is after their forecasts have already been downwardly revised).

Three for the Road

TWEET OF THE DAY

Darius Dale on Fox Business: Fed Unlikely To Raise Rates This Year https://app.hedgeye.com/insights/44753-darius-dale-on-fox-business-fed-unlikely-to-raise-rates-this-year… @HedgeyeDDale

@KeithMcCullough

QUOTE OF THE DAY

The task of the leader is to get his people from where they are to where they have not been.

Henry Kissinger

STAT OF THE DAY

When men hit their mid-50s, the median male worker is making about 127% more than he did when he was just starting out in his career, according to a report released this February by the Federal Reserve Bank of New York.