CLIENT TALKING POINTS
USD
Down USD on Friday as the rate of change in NFP hit another year-to-date. #Slowing low = EUR/USD up another +0.6% this morning testing $1.13 and the headline chase for everything “reflation” (from Glencore to Crude and Russian stocks) is on!
UST 2YR
After 7 consecutive failed “breakouts” > 0.75% in the 2YR, it got hammered. The UST 2YR was down -11 basis points last week and is down at 0.57% this morning (10YR = 1.99%) as Bond Bear hopes of a rate hike get blasted into 2016; rates were oversold Friday on the lows.
Stocks
But, but – “stocks are up” – sure, off those early Friday morning lows where both the Russell and S&P 500 tested year-to-date lows, and led largely by Basic Materials (XLB) reflation of +2.9% while Financials (XLF) were down with rates down -0.5% on the week.
**Tune into The Macro Show with Hedgeye CEO Keith McCullough at 9:00AM ET - CLICK HERE.
TOP LONG IDEAS
GIS
Our Consumer Staples team remains positive on General Mills coming out of the 2Q15 earnings call. We have been LONG GIS for the last six months and continue to have a favorable view of the company due to the following reasons:
- Sequential improvement in cereal
- Growth in Natural & Organic categories
- Snacking
- Cost cutting initiatives
- M&A activity
PENN
Many of the regional gaming states will release September revenues next week and as we’ve written about, they should look a lot better than August. Overall same store revenue declined 5% in August (we had predicted –2%) but most of the decline was due to the calendar and a difficult comparison. For September we are projecting an increase of 2% YoY
Our Missouri tracker is forecasting September gaming revenues to be up 3.6% YoY. This is a 6% sequential improvement from August's YoY change of -2.5%. Meanwhile, Pennsylvania slot revenues were up 4% in September. Our thesis for a sequential rebound in September remains intact. We like PENN on the long side from these levels.
TLT
It was an important couple of weeks for those who were still wrestling with our lower-for-longer views. The brevity of the macro moves post-report Friday proves just how non-consensus that call remains in a year where the S&P 500 is down -8%. The scary thing with regard to Janet’s credibility is that bad news is now being priced in as bad news. Moreover, we believe this late-cycle weakness is likely to remain ongoing.
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
NEW VIDEO
"It’s Different This Time” Just Exploded https://app.hedgeye.com/insights/46680-mccullough-it-s-different-this-time-just-exploded… via @KeithMcCullough #markets
@Hedgeye
QUOTE OF THE DAY
Never try to solve all the problems at once — make them line up for you one-by-one.
Richard Sloma
STAT OF THE DAY
ITB (iShares U.S. Home Construction ETF) has seen average fourth quarter returns of +15% over the last five years.
