Absurdity of The Day: China Steals Page Out of Greek Playbook, Shuts Down Trading In 200 Stocks


On today's edition of The Macro Show, Hedgeye CEO Keith McCullough has a reminder for members of the media who can’t stop talking about capital controls in Greece: China is at it too, having shut down more than 200 stocks in the Shanghai Composite due to "volatility."


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We are adding MCD to the Hedgeye Best Ideas list as a LONG.  As I said last week, 2015 will be the last time MCD will trade below $100 on an average price basis!


We will be hosting a live McDonald’s Black Book call on Wednesday, July 8th at 11am ET.


After nearly four years of being bearish on MCD, it’s now time to reverse course.  We are confident that MCD is not a structurally broken company.  Importantly, there are a number of initiatives in place that will ultimately reverse the fortunes of the company. 


Yes, fixing McDonald’s operationally will take time, but the seeds have been planted.  From the work I have done, by 2016 it will be clear that MCD is well on its way to reasserting itself as the dominate company that it is. 


McDonald’s CEO, Steve Easterbrook, is reshaping the company from the inside out and the financial impact of these actions are about to be clear.  Returning MCD to sustainable growth is centered on structural changes to the operating model and a recommitment to regaining the trust and loyalty of customers.


These changes are taking place in Oak Brook and at the local level.  Within McDonald’s local management and franchisees working together to improve the McDonald’s experience.  The new experience is consistent with what made the company great in the first place.


While financial engineering is part of the new foundation, its limitations are obvious so understanding how an operationally led turnaround will unfold is critical to make a longer-term commitment to being LONG MCD.


The LONG MCD BLACK BOOK will focus on:

  • How the new operating structure of the company is breathing new ENERGY into the company including improved profitability
  • The primary cause for the market share losses in the USA over the past three years and how the company is fixing it
  • The timeline for the turn in sentiment and performance  
  • Updated financials



Toll Free:


Confirmation Number: 13613786

Materials: CLICK HERE


As always, our prepared remarks will be followed by a live, anonymous Q&A session. Please submit your questions to .


REPLAY | $HCA, $ATHN, $MDSO and $HOLX Updates from Healthcare Sector Head Tom Tobin

Healthcare Sector Head Tom Tobin and Analyst Andrew Freedman shared key takeaways from last week's jobs report and the impact on HCA Holdings, Hologic, athenahealth and Medidata Solutions in their weekly Q&A earlier today. 


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.


TODAY (July 7th) at 1pm ET we will be hosting our highly-anticipated Quarterly Macro Themes conference call.  Led by CEO Keith McCullough, the presentation will detail the THREE MOST IMPORTANT MACRO TRENDS we have identified for the quarter and the associated investment implications. 




#ConsumerCycle: Consumption peaks late cycle and with domestic and global growth set to slow alongside easing inflation comps in 2H15, it looks increasingly likely 1H15 marked the current cycle peak in household spending growth.  We'll contextualize the current cycle, discuss the implications and detail how best to be counter-cyclically positioned as the consumer cycle enters its twilight. 


#SecularStagnation: Amid consensus expectations for a return to “normal” economic conditions, our analysis shows ample evidence of secular stagnation. In light of that, we reiterate our “lower-for-longer” thesis on growth, inflation and interest rates and continue to find the FOMC’s hawkish guidance wholly misplaced.


#EuropeSlowing: With our proprietary GIP (growth, inflation, policy) model we’ll outline the top 6 European economies that will be most impacted by real GDP growth slowing as inflation accelerates in the back half of 2015. The timing of ECB head Mario Draghi’s eventual response will be critical in terms of risk managing the EUR/USD exchange rate, as well as any associated spillover risks.



  • U.S. Toll-Free Number:
  • U.S. Toll Number:
  • Confirmation Number: 13612090
  • Materials:  CLICK HERE (the slides will be available approximately one hour prior to the start of the call)

As always, our prepared remarks will be followed by a live, anonymous Q&A session. Please submit your questions to .


Also, for those of you who cannot join us live, we will be distributing a replay video of the call shortly after it concludes.


Kind regards,


The Hedgeye Macro Team



CHART OF THE DAY: Burning Euros = #StrongDollarDeflation = Oil Slammed

Editor's Note: This is a brief excerpt and chart from today's morning market note from Hedgeye CEO Keith McCullough. Click here to learn how you can subscribe. 


CHART OF THE DAY: Burning Euros = #StrongDollarDeflation = Oil Slammed - z 07.07.15 chart


What are we learning this early in the week?


    1. Burning Euros (down another -0.7% to $1.09) are perpetuating #StrongDollarDeflation risks, across markets
    2. With the US Dollar up again yesterday, the CRB Commodities Index got tagged for a -3% loss in the backfield
    3. With WTI Oil and Copper -7.7% and -3.5% on the day, respectively, both are right back in @Hedgeye TAIL risk mode
    4. Energy Stocks (XLE) led losers -1.3% on that yesterday and are already -2.2% to start July = down -7.1% YTD


Captivating Parables

“From the very start of this captivating parable, I found myself relating to the character within.”

-Urban Meyer


That was a 2010 book recommendation from one of the best NCAA coaches of all-time. Urban Meyer is currently 38-3 coaching Ohio State Football and his teams have won 3 National Championships.


The book is called Lead For God’s Sake, by Todd Gongwer. And no, it’s not all about winning. In fact, it’s a repudiation of the win-at-all-costs (including our principles) mentality that some of the more self-centered in our society try to emulate today.


The book is about life and the foundations of all our pursuits. The manic nature of today’s macro markets is making me think about this book this morning. Was there any authentic leadership to begin with? Is there any trust? Where does this all end?


Captivating Parables - z u5


Back to the Global Macro Grind


That might be a little heavy for your morning brew, but economic gravity is getting heavier by the day at this point – and, instead of chasing the futures, we need to be probability-weighing the intermediate-to-long-term outcomes of ideological central planning.


Enter my Macro Team’s Q3 Global Macro Themes Deck. At 1PM EST today we’ll grind 70 slides of what we consider the #truth about the following economic and market risks:


  1. #ConsumerCycle (following our non-consensus #LateCycle call on US employment in Q2, this is a developing risk)
  2. #SecularStagnation (doubling down on our Global Demographic research, we go all secular on the Bernanke camp)
  3. #EuropeSlowing (you can’t print growth – this is the tail wagging the European dog; we’ll explain why)


While a goal is to be right on each of these themes, it’s not the purpose of this firm. I obviously get that achieving goals matters but, as I get more experience, I’m learning not to confuse my principles and purpose with my goals.


Our principles of Transparency, Accountability, and Trust have helped us build an independent research content production process that is repeatable. Every day, rain or shine, we rise and grind on the front-lines of the Global Macro debate.


No, that doesn’t mean we nail everything. Newsflash: neither do you. What it really means is that since we subject ourselves to every basis point in bond yields, every day, we have to test our premise faster than most. We have to fail faster. We have to learn faster.


What are we learning this early in the week?


  1. Burning Euros (down another -0.7% to $1.09) are perpetuating #StrongDollarDeflation risks, across markets
  2. With the US Dollar up again yesterday, the CRB Commodities Index got tagged for a -3% loss in the backfield
  3. With WTI Oil and Copper -7.7% and -3.5% on the day, respectively, both are right back in @Hedgeye TAIL risk mode
  4. Energy Stocks (XLE) led losers -1.3% on that yesterday and are already -2.2% to start July = down -7.1% YTD
  5. Industrial Stocks (XLI) fell to lower-lows yesterday (-4.5% YTD) and continue to signal #deflation in producer pricing
  6. The best defense against #DeflationDays remains the America Long Bond


Oh, and that China needs to pull a Greek-style central-market-planning move and halt trading of any stock that has gravity-based-volatility. Despite 203 tickers halted, the Shanghai Composite lost another -1.3% overnight, taking its crash in the last month to -25.8%.


But these are just immediate-term learnings. What about the intermediate-to-long-term? Having been the firm that initially warned you on volatility, deflation, and the probability of falling bond yields at this time last year, are we still relevant?


Or is it Captain Daily/Weekly Media who has won the day in making our profession a more transparent and accountable place? If Global Bond Yields were really “breaking out on inflation readings” in Q2, what about the #deflation of those inflations in Q3?


With both global growth and inflation expectations falling (again), Fed Fund Futures have dropped the implied probability of a September “rate hike” from over 40% at this time last week to 16% this morning.


But, again, that’s just the immediate-term TRADE. While the immediate-term parable of “free-markets” lost is captivating, from a leadership perspective it’s quite sad to watch. The long-term case for a world that is slower-for-longer is an unfortunate reality too.


Our immediate-term Global Macro Risk Ranges are now:


UST 10yr Yield 2.21-2.39%

SPX 2042-2087
VIX 15.59-20.11
USD 95.68-97.32
EUR/USD 1.09-1.12

Oil (WTI) 51.56-55.36
Copper 2.45-2.65


Best of luck out there today,



Keith R. McCullough
Chief Executive Officer


Captivating Parables - z 07.07.15 chart

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