And The Bounce…

Client Talking Points

USD

A massive move in cross-asset class volatility (one of the biggest in macro history) now has the USD in the position of bearish TRADE, bullish TREND – with EUR/USD risk range now = $1.12-1.16, will ECB President Mario Draghi be the news @JacksonHole and devalue again? BOJ guys don’t have it in their central planning playbook to let Yen run away from them from here either.

GOLD

Gold is correcting this morning (alongside Treasuries) on the Global Equity bounce and maybe that’s sniffing out a Draghi move too – we’ll see, but we’re in wait and watch mode here on buying Gold as we would rather buy it at the low-end of my 1,131-1,168 range on a European or Japanese FX War move.

VIX

One of the most epic moves in U.S. Equity volatility, ever – and ever, given the 2008 and 2011 moves we risk managed through, is a long time - this is an absolute Phase Transition that will ultimately have to answer to growth expectations – risk range on VIX is now 29.03-47.13!

Asset Allocation

CASH 73% US EQUITIES 2%
INTL EQUITIES 0% COMMODITIES 0%
FIXED INCOME 25% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
MCD

One of the ways that McDonald's is going to take market share back is through one of the most popular items on its menu—the Egg McMuffin. "I honestly believe that if there is a silver bullet, it’s all day breakfast for McDonald’s," says Restaurants Sector Head Howard Penney. "And I do believe they’re going down that road and they will do it."

 

Penney adds that we’ll probably know more about that at the November analyst meeting and what the breakfast potential will be. There’s obviously a lot of things that go around MCD doing breakfast (e.g. shrinking other parts of the menu, etc).

PENN

"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," writes Hedgeye Gaming, Lodging & Leisure Sector Head Todd Jordan. 

TLT

It was a very good week for those sitting behind the long-bond coming out of the FOMC minutes release on Wednesday. During a tumultuous 5-day stretch in which the S&P 500 fell over -5%, subscribers who followed our recommendation on TLT were sheltered from the market storm and gained almost +2%. Moreover, during the past month, TLT has gained +5.7% versus a -6.8% loss for the S&P 500 (a 1,200 basis point difference). In other words, it has paid handsomely to buck the consensus tide.

Three for the Road

TWEET OF THE DAY

FLASHBACK: 2.75% or 1.75%?  https://app.hedgeye.com/insights/45978-flashback-2-75-or-1-75 … via @hedgeye

@KeithMcCullough

QUOTE OF THE DAY

Keep your eyes on the stars and your feet on the ground.

Franklin D. Roosevelt

STAT OF THE DAY

The average age of German citizens is 46, the average age is second only to Japan’s. One in 20 Germans is over 80 and by 2050 it will be one in six, according to UN data.