Client Talking Points
We have no idea how anyone can trust their numbers, but even the ones they report are slowing – PMI 47.0 SEP vs. 47.3 AUG (lowest level since 2009). The Shanghai Composite remains in crash mode -2.2% overnight, -40% since APR.
It’s central-planning hope day for European Equities as ECB President Mario Draghi testifies to the overlords. The DAX is bouncing +1.2%, but that’s after a nasty crash day yesterday (inclusive of the bounce, DAX -22% since April) and SEP PMI slows (again) to 52.5 from 53.5.
Don’t forget that begging for Draghi to devalue is deflationary (Down Euro --> Up Dollar --> Down Commodities and related sectors). Energy (XLE) is down -20.7% year-to-date and Basic Materials (XLB) is down -15.1% year-to-date – easy calls to have stayed with. We reiterate the SELL call on Industrial demand & pricing (XLI -11% year-to-date).
**Tune into The Macro Show with Hedgeye CEO Keith McCullough at 9:00AM ET - CLICK HERE.
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Top Long Ideas
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 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.
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.
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
VIDEO (1min) Should You Stay Away From U.S. Equities? $SPY https://app.hedgeye.com/insights/46472-should-you-stay-away-from-u-s-equities…
QUOTE OF THE DAY
Learn to smile at every situation. See it as an opportunity to prove your strength and ability.
STAT OF THE DAY
According to a new study by researchers at Yale, Americans send 5 pounds of garbage per person per day to landfills.