Greece: Extend & Pretend

Client Talking Points

GREECE

Maybe it’s just us, but we can’t figure out what they actually did for Greece this morning – we guess that’s the point! Whatever it is they’re doing, the DAX loves it +3% after breaking down for weeks; Greek Stocks +8.3% (but -11.4% month-over-month).

RATES

The more interesting move is the #divergence between German/American 10s (both +6 basis points day-over-day) vs Italian/Spanish 10s (yields for both down -12 basis points day-over-day); credit /flow move we guess (US 10YR Yield was -13 basis points week-over-week coming into this).

USD

Down -0.9% last week for the U.S. Dollar Index (that makes it down 3 weeks in a row into and out of an incrementally dovish Fed); USD down -5.2% in the last 3 months, so it will be important to continue to watch its easing signal as #LateCycle econ data rolls in.

 

**The Macro Show - CLICK HERE to watch today's edition at 8:30AM ET, with special guest Healthcare Sector Head Tom Tobin.

Asset Allocation

CASH 36% US EQUITIES 8%
INTL EQUITIES 14% COMMODITIES 14%
FIXED INCOME 25% INTL CURRENCIES 3%

Top Long Ideas

Company Ticker Sector Duration
PENN

Shares of Penn National Gaming are up approximately 9% since it was added to Investing Ideas on May 26. Our Gaming, Lodging & Leisure team reiterates their high conviction on the stock and notes that Ohio and Kansas have both been super-strong revenue generators in the month of May. This positive development has has led our analysts to raise their estimates even higher (and we're already the highest on the street...).

ITB

It was a busy week across the housing space with a host of fundamental releases, builder earnings and notable regulatory updates.   Net-net-net....the past week offered another positive update on the state of the residential real estate market with housing turned in a second week of strong, positive absolute and relative performance. The NAHB HMI (Builder Confidence Index) for June surged across all categories and in all regions, posting its best reading in almost 10 years. Total Starts declined -11% MoM to +1.036 MM units with SF and MF starts declining -5.4% and -20.2% month-over-month, respectively.  Permits, meanwhile, rose to an 8-year high advancing +11.8% sequentially and +25% year-over-year.   The strength in permits augurs forward strength in Starts and suggest residential construction spending will be (increasingly) supportive of GDP growth over the next couple quarters.

 

TLT

Bottom line right now remains that Lower-For-Longer is firmly intact as long as US #GrowthSlowing is. As Keith pointed out on Friday, Consensus Macro is still stubbornly sticking to the tired idea that rates have to go higher - they just have to... because, they haven't? All told, it was a great week sticking with the process on the long side of bonds. Here we feature an in-depth discussion from Senior Macro Analyst Darius Dale which does a thorough job outlining where our macro team currently stands with respect to the Fed, interest rates, markets and economy. The prescient discussion occured just hours before release of the FOMC statement.

Three for the Road

TWEET OF THE DAY

Starbucks doubles its Global Farmer Fund Program; In 2015 99% of @Starbucks coffee supply chain verified as ethically sourced $SBUX

@HedgeyeHWP

QUOTE OF THE DAY

Leadership is intentional influence.

Michael McKinney

STAT OF THE DAY

“Jurassic World” is only the second film in history to top $100 million in two separate weekends. “Jurassic World” has now passed “Jurassic Park” ($357.1 million) as the highest-grossing domestic release in the franchise’s history when not adjusted for inflation.


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