CLIENT TALKING POINTS
USD
Driven higher on Down Euro – Mario Draghi taking his turn from now until Jackson Hole and there is only 1 move, and that’s to devalue; while EUR/USD -0.6% this morning to $1.08 is immediate-term oversold, you want to be shorting all-bounces in the $1.10-1.11 range.
COMMODITIES
The other clean cut side of this risk management setup is to stay net short commodities – the CRB Index was -1.3% yesterday vs. SPX -0.07% and that’s where the alpha is on the bear side; CRB Index, Oil, Gold, Copper, etc. all bearish on all 3 of our risk management durations.
JAPAN
Another way to play this #StrongDollar Deflation (Down Yen) is long Japanese Stocks – Nikkei +0.7% overnight and +1.7% month-over-month remains our fav stock market (Euro our fav FX short).
**The Macro Show - CLICK HERE to watch a replay of today's edition.
TOP LONG IDEAS
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
- Gluten-Free Cheerios
- No artificial colors or flavors in the cereal
- Granola innovation / Muesli
- Greek Plenti / Whips
- Original yogurt sugar reduction
- Renovation on Grain Snacks
- Strong push on Natural & Organic products
- Delivering Value to consumer on brands like Totino’s and Hamburger Helper
- 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:
- Negative demographic trends globally (decline in population growth and aging population)
- 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
Asset Allocation
| CASH | 55% | US EQUITIES | 2% | |
| INTL EQUITIES | 5% | COMMODITIES | 0% | |
| FIXED INCOME | 28% | INTL CURRENCIES | 10% |
THREE FOR THE ROAD
TWEET OF THE DAY
EUROPE: we aren't short anything in Europe right now other than the Euro, but I'm getting very interested on this bounce
@KeithMcCullough
QUOTE OF THE DAY
Men acquire a particular quality by constantly acting in a particular way.
Aristotle
STAT OF THE DAY
The Clinton campaign has brought in $46,725,329.13 so far, according to its first FEC filing.
