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Client Talking Points

USD

There was a clean cut overbought signal for the USD vs EUR and Yen yesterday (see Real-Time Alerts product for timestamps) as the EUR/USD tested the low-end of its 1.11-1.14 risk range and is now bouncing on the Greek headlines.

NIKKEI

Get the Dollar (and Yen right), you’ll get Japanese stocks right – big rally in the Nikkei to its highest level since 1996 and with the Yen bouncing here this morning vs USD we would be booking some of those Nikkei gains as it is signaling overbought at 20,899.

 

YIELDS

Another day, another line of storytelling on why “bond yields are going to breakout” (this time it was our bull case on #HousingAccelerating, which we get – but please don’t look at the Durable Goods print of -2.5% year-over-year!) – 10YR pulls back -4 basis points to 2.37% this morning with no support to 2.18%; great spot to short the Financials and buy Long-term Bonds with those U.S. and Japanese equity gains.

 

**The Macro Show - CLICK HERE to watch today's edition at 8:30AM ET, with Macro Analyst Darius Dale, Restaurants & Consumer Staples Sector Head Howard Penney and CEO Keith McCullough will be dialing in.

Asset Allocation

CASH 36% US EQUITIES 8%
INTL EQUITIES 12% COMMODITIES 14%
FIXED INCOME 27% 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

Can a Strong Housing Market Carry Economic Expansion? https://app.hedgeye.com/insights/44835-can-a-strong-housing-market-carry-economic-expansion … via @hedgey

@KeithMcCullough

QUOTE OF THE DAY

The best way to have a good idea is to have a lot of ideas.

Dr. Linus Pauling

STAT OF THE DAY

Hawaii is now the first state to raise the minimum smoking age to 21, effective January 1, 2016.