Lower-highs

Client Talking Points

USD

While yesterday’s Fed commentary was, on the margin, dovish (this time acknowledging that “reflation” isn’t happening anymore), we think both rates and USD are trading up this morning ahead of what should be a “good” headline GDP report – it’ll read good vs the “bad” Q1, then Q3 will just be bad vs. Q2 again. 

GOLD

Positioned for #deflation? Gold bounced then faded like a flower, trading down another -0.9% this morning and has no immediate-term support to $1065/oz – most of the “reflation” trades led the 2-day U.S. equity bounce; fade them.  

DAX

The DAX is up +0.4% on the bounce but remains bearish TREND @Hedgeye with no support to 10,905 – while some may want to ignore the “data” right now, you shouldn’t . July CPI readings are dropping again this morning with Spain back to 0.0% year-over-year.

Asset Allocation

CASH 49% US EQUITIES 5%
INTL EQUITIES 9% COMMODITIES 0%
FIXED INCOME 23% INTL CURRENCIES 14%

Top Long Ideas

Company Ticker Sector Duration
GIS

General Mills (GIS) remains on the Hedgeye Consumer Staples Best Ideas list as a LONG. Key segments across the company are turning the corner and improving performance. Specifically GIS has figured out the yogurt category, after 3 years of struggling with Greek and losing on the core business, management has turned the Yogurt division into a growth segment. Cereal has obviously been a struggle for all companies participating. Although still down, the trend is looking better, in FY16 we hope to see the switch to Gluten Free Cheerios and other improvement, turn performance around.

PENN

Penn National Gaming reported Q2 profit of $16.9 million on Thursday. The company's profit of 19 cents per share beat analysts' expectations.  PENN posted revenue of $701 million in the period, which also beat forecasts.  Shares have climbed 40% since the beginning of the year and 58% over the last 12 months, obviously much higher than the S&P 500. Gaming, Lodging and Leisure Sector Head Todd Jordan was at Penn National Gaming's investor day on July 24th. He will provide a detailed update this week.

TLT

Those long of #LowerforLonger enjoyed another solid week of 2%+ gains for TLT and EDV. VNQ followed up last week’s gains with a pullback of equal size, but we received a positive sloth of data this week that confirms our long housing theme. A positive housing outlook within a bearish rate environment should be positive for VNQ.

Three for the Road

TWEET OF THE DAY

$LINE $LNCO to suspend distribution!

@HedgeyeEnergy

QUOTE OF THE DAY

If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is a compromise.

Robert Fritz

STAT OF THE DAY

This quarter marked the 5th consecutive quarter of traffic growth for PNRA, showing strong performance versus the competition beating Black Box Intelligence traffic metrics by 290 basis points in 2Q.


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