Welcome to Month-end

Client Talking Points

USD

One of the best positions you could have had this month was LONG the U.S. Dollar and SHORT the #Deflations (commodities and their country, currency, debt, equity, etc. links) – USD is retesting the top-end of its range here and hammering Oil (-1.5%), Russian Stocks (-1.9%), etc. 

#DEFLATION

Eurozone and/or Italian CPI of 0.2% year-over-year isn’t a win for Mario Draghi, and the sovereign-bond market is starting to figure that out again (he needs to bring more cowbell to Jackson Hole); 10YR German Yield down to 0.65% this morning and could go a lot lower.  

JAPAN

On a positive note, we hope you stayed with the net LONG Japanese equity position in July – it performed as well as the Yen did not. Last night’s core CPI print of 0.1% year-over-year in Japan (Household Spending -2% year-over-year) keeps the easy money play firmly intact.

 

**The Macro Show - CLICK HERE to watch today's edition at 8:30AM ET, with Hedgeye CEO Keith McCullough and Macro & Housing Analyst Christian Drake.

Asset Allocation

CASH 49% US EQUITIES 5%
INTL EQUITIES 8% COMMODITIES 0%
FIXED INCOME 24% 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

Italy's unemployment rate ramps to 12.7% (from 12.5%) - Draghi's drugs doing nothing but asset inflation

@KeithMcCullough

QUOTE OF THE DAY

The force of character is cumulative.

Ralph Waldo Emerson

STAT OF THE DAY

According to a Quinnipiac poll, 30% of Republican voters said they definitely did not support Donald Trump in his bid for the party’s presidential nomination.


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