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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Client Talking Points

EUROPE

Euro Down, Stocks Down? Oh boy, that’s not what European Equities are used to – so ECB President Mario Draghi has his work cut out for him tomorrow testifying in front of Euro Parliament. With the DAX and IBEX signaling oversold (both in crash mode, down > 20% vs. April highs) tomorrow = big central-planning event day. Reminder: they can’t CTRL+Print Growth.

USD

The USD was straight up on some kind of hope yesterday that the Fed is going go “raise rates in OCT”… C'mon man! They don’t have a press conference in OCT – and, again, the rate of change in all U.S. data continues to slow here so take these Dollar Up, Rates Up days as buying opportunities in things that have fundamentals, like Housing (ITB).

UST 2YR

Shall we call this the head-fake “breakout” chart of the year? Or of the last 4 years? Right back down to 0.68% this morning and there’s plenty of downside left if the “data dependent” Fed calls Q3 GDP for what it is #SLOWING – staying with Long-term Bonds and stocks that look like bonds, because that’s what’s working – still short Financials (XLF).

 

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

Asset Allocation

CASH 68% US EQUITIES 0%
INTL EQUITIES 0% COMMODITIES 6%
FIXED INCOME 26% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
MCD

McDonald’s remains one of our Restaurant teams Best Ideas on the LONG side.  We continue to believe that 3Q15 will be the inflection point for the company’s turnaround and that we are going to be looking at a much different company 1-3 years from now.

 

Urgency has been instilled from the top down by new CEO Steve Easterbrook. He wants more speed and is encouraging people to get things done faster. The food and experience provided to the customer will greatly improve over the coming months as “Experience the Future” is implemented across the system. It won’t be instantaneous though, as MCD has a lot of work to do around changing the perception to bring back customers it may have lost.

PENN

Penn National Gaming continues to be our favorite Regional Gaming stock.

 

Regional numbers for August have come in soft, but we predicted the August weakness. September revenues should rebound and serve as a catalyst for the stock going into Q3 earnings. On the research side we have not altered our views of PENN’s long term growth story. We continue to see more upside from current price levels. 

TLT

Slower (and Lower) For Longer remains our non-consensus call. It's nice to see that the Fed is finally starting to see what the #GrowthSlowing late-cycle data does.

  1. GROWTH: is #LateCycle and will be slower (again) in Q3 than it was in Q2
  2. INFLATION: misreported, yes – in the area code of the Fed’s 2% “target”, no

Our estimate for Y/Y% GDP for Q3 is a range of 0.1% to 1.5%. Even the Q/Q SAAR # that consensus hangs on will be comping against a 3.7% Q/Q SAAR GDP print (second revision). Good luck positioning for a rate hike. Prepare for the fade…. AGAIN.

Three for the Road

TWEET OF THE DAY

DAX Support Is ‘Gone. Shot. Dead.’ https://app.hedgeye.com/insights/46452-mccullough-dax-support-is-gone-shot-dead… via @hedgeye

@KeithMcCullough

QUOTE OF THE DAY

The greatest discovery of my generation is that human beings can alter their lives by altering their attitude of mind.

William James

STAT OF THE DAY

Macy's plans to hire 85,000 employees for this Holiday Season, which is down from 86,000 last year. 12,000 of the employees will be for DTC fulfillment centers.