CLIENT TALKING POINTS
Asia
Back out a completely manipulated Chinese stock market and look at Dr. KOSPI vs Semis (SMH) this morning (both making fresh 6 month lows – not exactly your “ex-PMIs” global growth charts!). Taiwan is down another -1.9% overnight taking its 1 month decline to -11.3%, Vietnam devalues Dongs, and India is starting to freak about Rupee weakness…
FTSE
The FTSE is down another -0.9% this morning taking its 1 month drop to -4.5% and testing new 6 month lows as well – FTSE isn’t London, but London isn’t a #Deflation-free zone either! Lots of moneys piled up there on inflation expectations.
#DEFLATION
Are the bounces in Oil now ½ day affairs? Copper didn’t bounce at all – our immediate-term risk range process continues to signal lower-lows in both Oil and Copper (and Russia and Junk Bonds … and pretty much every deflation domino the Fed will perpetuate with a rate hike).
TOP LONG IDEAS
MCD
"We are very bullish on McDonald’s," says Restaurants Sector Head Howard Penney. "We like where this company is going. We like the new CEO and the changes they’re making."
Penney notes that there are a lot of things going on inside the company which we can’t see that are extremely meaningful to where this company will be in 12-18 months.
"I’ve said this a dozen times recently, but 2015 will be the last year McDonald’s trades at an average price below $100," he says.
PENN
"As we predicted, regional gaming revenues surged in July which gives us confidence in our Q3 EPS estimate of $0.23, which is $0.04 above the Street," writes Hedgeye Gaming, Lodging & Leisure Sector Head Todd Jordan. "We continue to like Penn National Gaming here due to stable regional gaming trends, better than expected quarterly and annual earnings, and the Plainridge and Jamul contribution to PENN’s two-year growth story."
TLT
The set-up for the September FOMC meeting is as follows:
- The Fed runs the risk of tightening into a late-cycle slowdown which could ultimately flatten the yield curve (BULLISH for TLT, EDV, VNQ).
- Slower growth and deflationary headwinds are acknowledged and the can is kicked on a rate hike which should also be good for bonds. Until growth inflects positively, you’ll see TLT in our investment conclusions as the yield curve is the best proxy for forward looking growth expectations.
Asset Allocation
| CASH | 62% | US EQUITIES | 2% | |
| INTL EQUITIES | 6% | COMMODITIES | 0% | |
| FIXED INCOME | 24% | INTL CURRENCIES | 6% |
THREE FOR THE ROAD
TWEET OF THE DAY
VIDEO (2mins) Here’s The Problem With 50-Day Moving Averageshttps://app.hedgeye.com/insights/45878-here-s-the-problem-with-50-day-moving-averages… via @hedgeye
@KeithMcCullough
QUOTE OF THE DAY
In the end, it's not the years in your life that count. It's the life in your years.
Abraham Lincoln
STAT OF THE DAY
According to a Gallup survey, 58% of Americans have a favorable view of labor unions.
