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Client Talking Points

DAX

The DAX bounced, “off the lows” … into month end down -24% since April; nothing new there – bear market bounce within more slowing data post yesterday’s 0.0% German CPI; Eurozone CPI moves into the #deflation zone at -0.1% year-over-year in SEP which should prompt ECB President Marion Draghi’s QE Cowbell.


COPPER

Copper bounced, off the crashing lows… +2.5% as we’re sure people are starting to concern themselves with another “reflation” as the Fed contemplates more slowing economic data (= USD down, hoped-for-reflation up).

UST 10YR

After tapping 2.05% into the close yesterday, it was a great month (and quarter) for the best way to play #Deflation & #GrowthSlowing (Long-Duration Bonds). Since 2.04% is the low-end of our current 2.04-2.15% range, it should be no surprise to see a yield bounce “off the lows” this morning.

 

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

Asset Allocation

CASH 70% US EQUITIES 0%
INTL EQUITIES 0% COMMODITIES 8%
FIXED INCOME 22% 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

VIDEO (2mins) Carl Icahn Can’t Be Serious https://app.hedgeye.com/insights/46597-mccullough-carl-icahn-can-t-be-serious

@KeithMcCullough

QUOTE OF THE DAY

Formula for success:  rise early, work hard, strike oil.

J. Paul Getty

STAT OF THE DAY

Mobile ads account for about 76% of Facebook’s ad revenue.