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Client Talking Points

CHINA

So they nailed another perfect 7.0 for said GDP in Q2 (same made-up # in Q1, not 6.87, or 7.11 – 7.0%) but the locals didn’t believe that, selling the Shanghai Composite Casino down for a -3% day (-4.2% in the last 2 days and -24.8% in the last month). 

OIL

Big up day for big Energy beta yesterday (Dollar was down), but don’t confuse a TRADE with a TREND - #StrongDollar holds all lines of support and WTI fades right at the top-end of our $49.79-53.61 risk range.

U.S.

Ugly U.S. Retail Sales report (must have been the sun – always gets ya after the snow) and UST 10yr Yield did what you’d expect on that, falling back to 2.39% this morning as consensus continues to bet Janet isn’t really data dependent (we think she actually is).

 

**The Macro Show - CLICK HERE to watch a replay of today's edition.

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:

Yoplait in China

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

Falling relative prices of capital goods  

Three for the Road

TWEET OF THE DAY

The Fed had been wrong on US growth "expectations" for 4 years in a row

@KeithMcCullough

 

 

QUOTE OF THE DAY

I am easily satisfied with the very best.

Winston Churchill

 

STAT OF THE DAY

A record 62% of Japanese households labeled their livelihood as hard in 2014.