Off The Lows?

Client Talking Points

EUROPE

They had the DAX and CAC down -5% at 2:00AM ET; now they’re down -3%. The levels obviously matter inasmuch as liquidity does – TREND levels to watch = DAX 11,375, CAC 4980, IBEX 11,199. 

YIELDS

Not “off the lows” for Greek, Italian, Spanish, etc. yields (Italy =25 basis points to 2.39% is finally > UST 10YR of 2.34%), and they’re high-grading with a big bid to UST + German Bunds too (10YR down -18 basis points on the day to 0.74%); this is the 4th time UST 2YR has failed to “breakout” > 0.75%.

S&P

Not “off the lows” for Greek, Italian, Spanish, etc. yields (Italy =25 basis points to 2.39% is finally > UST 10YR of 2.34%), and they’re high-grading with a big bid to UST + German Bunds too (10YR -18 basis points on the day to 0.74%); this is the 4th time UST 2YR has failed to “breakout” > 0.75%.

 

**The Macro Show - CLICK HERE to watch today's edition at 8:30AM ET, with special update on Greece.

Asset Allocation

CASH 44% US EQUITIES 6%
INTL EQUITIES 10% COMMODITIES 10%
FIXED INCOME 30% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
PENN

Not “off the lows” for Greek, Italian, Spanish, etc. yields (Italy =25 basis points to 2.39% is finally > UST 10YR of 2.34%), and they’re high-grading with a big bid to UST + German Bunds too (10YR -18 basis points on the day to 0.74%); this is the 4th time UST 2YR has failed to “breakout” > 0.75%.

ITB

Not “off the lows” for Greek, Italian, Spanish, etc. yields (Italy =25 basis points to 2.39% is finally > UST 10YR of 2.34%), and they’re high-grading with a big bid to UST + German Bunds too (10YR -18 basis points on the day to 0.74%); this is the 4th time UST 2YR has failed to “breakout” > 0.75%.

TLT

After a Fed-fueled week of strength in slow-growth, yield-chasing asset classes and long duration fixed income, both the Dollar and interest rates re-couped their losses from Fed Week. The dollar declined, rates increased, and as a result, those long of gold took some pain. Will this continue? Will a long, sustained rate liftoff ensue? We don’t think so. We continue to repeat that the chance of further downward revisions to forward looking growth estimates from the Federal Reserve and consensus macro is much more likely than not. The attempted suspension of economic gravity from policy makers weakens the currency and puts pressure on bond yields. We remain long of this set-up with gold and long-duration fixed income.

Three for the Road

TWEET OF THE DAY

Greek Drama https://app.hedgeye.com/insights/44923-greek-drama-a-hedgeye-contributor-view… via @hedgeye

@KeithMcCullough

QUOTE OF THE DAY

If you do not expect the unexpected you will not find it, for it is not to be reached by search or trail.

Heraclitus

STAT OF THE DAY

Greece has received the equivalent of 214% of its GDP in aid from the Eurozone, ten times more, relative to gross domestic product, than Germany after the Second World War.


Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more

Energy Stocks: Time to Buy the Dip? | $XLE

What the heck is happening in the Energy sector (XLE)? Energy stocks have trailed the S&P 500 by a whopping 15% in 2017. Before you buy the dip, here's what you need to know.

read more

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more