CLIENT TALKING POINTS
EURO
The Euro bounced right off our $1.10 TRADE support and seeing follow through to $1.12 vs. USD this morning as Bundesbank chief Jens Weidmann outlines his skepticism towards QE post the ECB President Mario Draghi fade – lots of macro moves on this.
GOLD
Long Gold is one of the plays after Up Euro = Down Dollar (Up Gold) and looks good post our Real-Time Alert to buy it again yesterday post the Draghi speech. To get a bigger breakout in Gold (toward $1190) we’d need the Fed to fade on the DEC hike (which we think they will).
DAX
The DAX does not like the Draghi fading – straight back down yesterday into crash mode (currently no bounce this morning -22.2% since April); reminder that we have the lowest European (and German) GDP estimates on the Street for both Q3/Q4 and 2016 #EuropeSlowing.
**Tune into The Macro Show with Hedgeye CEO Keith McCullough at 9:00AM ET - CLICK HERE.
TOP LONG IDEAS
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.
- GROWTH: is #LateCycle and will be slower (again) in Q3 than it was in Q2
- 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.
Asset Allocation
| CASH | 68% | US EQUITIES | 0% | |
| INTL EQUITIES | 0% | COMMODITIES | 8% | |
| FIXED INCOME | 24% | INTL CURRENCIES | 0% |
THREE FOR THE ROAD
TWEET OF THE DAY
VIDEO (2mins) Is This Raging Keynesian Bureaucrat the ‘Wesley Mouch’ of Today’s Atlas Shrugged? https://app.hedgeye.com/insights/46494-is-this-raging-keynesian-bureaucrat-the-wesley-mouch-of-today-s-atla…
@KeithMcCullough
QUOTE OF THE DAY
Cultivate optimism by committing yourself to a cause, a plan or a value system. You'll feel that you are growing in a meaningful direction which will help you rise above day-to-day setbacks.
Dr. Robert Conroy
STAT OF THE DAY
According to the [unofficial] Caixin-Markit Manufacturing PMI series, Chinese growth slowed to a 78-month low in September, with the Output sub-index dropping to a lowly 45.7 from 46.4 in August.
