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    MARKET EDGES

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Client Talking Points

CHINA

They unhalted 250 names overnight (793 are still halted) and the Shanghai Composite Casino couldn’t hold it’s 3-day gains. The Sganhai Composite closed -1.2% and remains in crash mode (down -24% month-over-month) < @Hedgeye TREND resistance of 4,275. 

#EUROPESLOWING

If only they didn’t have to report the JUN and JUL data! Eurozone ZEW (economic sentiment) slows to 42.7 JUL vs 53.7 JUN as JUN CPI/PPIs across the board stops “recovering” – German CPI 0.3% JUN, Spain’s 0.1, Sweden slows to -0.4 vs +0.1 last.

OIL

Commodity (and Junk Debt) #Deflation = on as long as this Down Euro begging remains and Janet Yellen doesn’t get as dovish as the data is getting; WTI -1.9% with no immediate-term support to $49.08. Natutal Gas looks like a great short here too.

 

**The Macro Show - CLICK HERE to watch today's edition at 8:30AM ET with a full lineup including CEO Keith McCullough, Healthcare Sector Head Tom Tobin, Financials Sector Head Josh Steiner and Macro Analyst Darius Dale.

Asset Allocation

CASH 53% US EQUITIES 3%
INTL EQUITIES 6% COMMODITIES 0%
FIXED INCOME 29% INTL CURRENCIES 9%

Top Long Ideas

Company Ticker Sector Duration
GIS

General Mills remains on the Hedgeye Consumer Staples Best Ideas list as a LONG. GIS has a lot of things going for it and they are going to show it in the top and bottom line this year. Over the last couple of months, the company has announced the removal of artificial colors and flavors from their cereals. More recently, they have committed to using only cage-free eggs.  Many of these small actions that management is taking are going to have a snowball effect as they go throughout FY16. Below is a list of some of the biggest things that we are looking forward to this year:

  1. Yoplait in China
  2.  Gluten-Free Cheerios
  3. No artificial colors or flavors in the cereal
  4. Granola innovation / Muesli
  5. Greek Plenti / Whips
  6. Original yogurt sugar reduction
  7. Renovation on Grain Snacks
  8. Strong push on Natural & Organic products
  9. Delivering Value to consumer on brands like Totino’s and Hamburger Helper
  10. Bringing U.S. innovation International
PENN

Gaming, Lodging and Leisure Sector Head Todd Jordan reiterates his team's bullish high-conviction thesis on Penn National Gaming. The company remains one of our favorite names on the long side and boasts the best new unit growth story in domestic gaming. Jordan further notes that with more states releasing their June gaming revenues this past week, we feel more confident in our higher than consensus Revenue, EBITDA, and EPS estimates.

TLT

Long-term Treasury rates remain the best proxy for forward-looking growth expectations. We outline three components of secular stagnation below to explain the SAVINGS/INVESTMENT GLUT that is at the heart of the academic argument for current policy measures:

  1. Negative demographic trends globally (decline in population growth and aging population)
  2. Reduced capital intensity in leading industries (think of the capital and labor required to start Facebook over U.S. Steel)
  3. Falling relative prices of capital goods       

Three for the Road

TWEET OF THE DAY

VIDEO: This Could Crash The Market  https://app.hedgeye.com/insights/45178-mccullough-this-could-crash-the-market… via @hedgeye

@KeithMcCullough

QUOTE OF THE DAY

Commitment is the enemy of resistance, for it is the serious promise to press on, to get up, no matter how many times you are knocked down.

David McNally

STAT OF THE DAY

Nationally, Canadian Home Prices have risen around 160% since the turn of the millennium.