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The Macro Show Replay | October 1, 2015

 


Long Bond Marches On

Client Talking Points

PMIs

Slower-for-longer, reiterated across Asia and Europe overnight with Japan’s PMI slowing to 51.0; China 49.8; Spain 51.7 (vs. 53.2 last month); Italy 52.8 (vs. 53.8 last month); France and Germany = 50.6 & 52.3 – all better than the U.S. (Chicago) PMI plunge to a recessionary 48.7 (vs. 54.4 last)!

RUSSELL 2000

The Russell 2000 bounced yesterday, but is still down  -15.1% from its #Bubble peak and very much signaling that a crash type draw-down (greater than 20%) is in play like you’ve seen from Hong Kong to Germany. This reiterates that you need to get liquid on rallies, avoiding small cap/high beta.  

UST 10YR

UST 10YR Yield was actually down on the day yesterday and down again this morning to 2.05%. We’re one more slowing U.S. jobs report away from a 1-handle; risk range on the 10YR continues to signal lower-highs (2.14% resistance) with all-time lows in play.

 

**Tune into The Macro Show with Hedgeye CEO Keith McCullough 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

NEW VIDEO | Eye on The #Election Vol. 1: Fondness Fading for #Trump and #Hillary https://app.hedgeye.com/insights/46627-eye-on-the-election-vol-1-fondness-fading-for-trump-and-hillary… via @HedgeyeDJ cc @KeithMcCullough

@Hedgeye

 

 

QUOTE OF THE DAY

One important key to success is self-confidence. An important key to self-confidence is preparation.

Arthur Ashe

STAT OF THE DAY

Apple announced that it sold a record 13 million iPhone 6s and 6s Plus handsets over launch weekend, breaking last year’s record of 10 million.


October 1, 2015

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BULLISH TRENDS

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BEARISH TRENDS

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