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Client Talking Points

USD

A one-day move higher (off the lows) in USD and rates does not a credible rate hike make – no follow through so far on that with Janet Yen actually +0.2% vs USD this morning (Nikkei doesn’t like that, down another -1.3%).

RATES

Bond market doesn’t believe Yellen – neither does the growth data. 0.69% UST 2YR and 2.16% UST 10YR both remain bearish TREND signals for yields as Utilities (XLU) continue to breakout (+1.2% in a down tape last week, +2.9% in the last 3 months).

CRASHES

Biotech stocks (IBB) moved into crash mode on Friday (-22% from the July peak) joining China, Germany, Spain, Oil, Emerging markets, etc. in what is the most visible slow-moving-train-wreck Keith has seen in High Beta in his career. Latin American Stocks (MSCI) -27.3% in last 3 months.

 

**Tune into The Macro Show with special guest Hedgeye Restaurants and Consumer Staples analyst Howard Penney at 9:00AM ET - CLICK HERE

Asset Allocation

CASH 70% US EQUITIES 0%
INTL EQUITIES 0% COMMODITIES 7%
FIXED INCOME 23% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
MCD

McDonald’s clearly continues to be well-liked by our Restaurants research team and is a near perfect fit into our macro team’s current "style factor" preferences. This stock is high cap with a low-beta, coupled with a company turnaround story that is currently well underway. We believe this stock will do well through this tumultuous time in the market.

 

As previously mentioned, the company has all day breakfast starting on October 6. We anticipate this development as not only driving increased visits from existing customers, but also new customers that maybe don’t wake up early enough to get breakfast by 10:30am (or simply just people that enjoy eating breakfast items outside of the morning!)

PENN

As Sector Head Todd Jordan notes, "PENN should benefit from the release of state gaming figures over the next few weeks. Recall that August was weaker than many thought. While we predicted this particular slowdown, our model is showing a sharp September rebound.

 

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

Is the U.S. economy still showing signs of a cyclical slowdown? Yes.  If you, like us, remain skeptical on the said policy path from our omnipotent central planners, and you believe growth continues to slow, then we respectfully submit that you sit on your GLD and TLT allocations.

 

3 GDP comps are difficult. And, once the data comes out, we think expectations will be downwardly revised again. In other words, wait for yet another Fed punt on a 2015 hike.

Three for the Road

TWEET OF THE DAY

JAPAN: Nikkei draw-down continues, -1.3% overnight, -7.8% in the last month

@KeithMcCullough

QUOTE OF THE DAY

The winner's edge is not in a gifted birth, a high IQ, or in talent. The winner's edge is all in the attitude, not aptitude. Attitude is the criterion for success.

Dennis Waitley

STAT OF THE DAY

33 million Americans, 10.4% of the U.S. population went without health insurance for the entirety of 2014.