Grand Central Planning

Client Talking Points

CHINA

Devaluation is what all of these people think they should do when it’s never worked; China did that (and everything else they could) but ended up with its stock market down another -3.4% overnight = right back to where all the central plannings of markets escalated – nice job.

UST 10YR

While we’re not sure if there were many uber Bond Bulls left in June, we’re happy to be here this morning – it wasn’t easy, but life isn’t either. Currently the UST 10YR is around 2.11% with next support at 2.07% as both growth and inflation slow, at the same time = Swiss 10YR is down -0.26% and the 10YR Bund is 0.60%.

EQUITIES

If you’re the growth bear (Hedgeye), you are not telling people to own most equity markets at all-time highs – in the last month alone here are the Global Equity market draw-downs: Russia -13%, Singapore -11%, Hong Kong -10%, Germany -10%, Turkey -10%, KOSPI -8%, Australia -7%, FTSE -6%, Russell 2000 -5%.

 

 

**Tune into The Macro Show with Hedgeye CEO Keith McCullough at 9:00AM ET CLICK HERE

Asset Allocation

CASH 64% US EQUITIES 2%
INTL EQUITIES 4% COMMODITIES 0%
FIXED INCOME 26% INTL CURRENCIES 4%

Top Long Ideas

Company Ticker Sector Duration
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:

  1. The Fed runs the risk of tightening into a late-cycle slowdown which could ultimately flatten the yield curve (BULLISH for TLT, EDV, VNQ).
  2. 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. 

Three for the Road

TWEET OF THE DAY

VIDEO: Here's How We Get $25 Oil https://app.hedgeye.com/insights/45898-mccullough-here-s-how-we-get-25-oil… via @hedgeye

QUOTE OF THE DAY

Trust men and they will be true to you: treat them greatly and they will show themselves great.

Ralph Waldo Emerson

STAT OF THE DAY

Total global expenditure on luxury goods in 2014 was $1.1 trillion.