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Client Talking Points

JAPAN

Down Dollar (post bad jobs report, slowing ISM, etc.) = Up Yen --> developing bearish TREND in Nikkei – with many hoping “China opening up” post the break could drive the next leg of SPX squeezage. The Nikkei didn’t cooperate, failing @Hedgeye TREND resistance -1% overnight.

SPAIN

Spain is the best short idea in European Equities (we will review this on our Q4 Macro Themes call today at 1PM) is leading losers in Europe this morning -0.8% with no support for the IBEX to the year-to-date closing lows; in other news, Deutsche Bank news has to be bullish, because it’s so bad? Short JPM.

UST 10YR

The bond market, once again, doesn’t care about performance issues in U.S. equities – 2.04% UST 10YR Yield with no support to 1.96% ahead of earnings season and what should be a slowing U.S. GDP report at the end of October.

 

**Tune into The Macro Show with Hedgeye CEO Keith McCullough in the studio at 9:00AM ET - CLICK HERE

 

Asset Allocation

CASH 65% US EQUITIES 0%
INTL EQUITIES 0% COMMODITIES 8%
FIXED INCOME 27% INTL CURRENCIES 0%

Top Long Ideas

Company Ticker Sector Duration
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.  

Three for the Road

TWEET OF THE DAY

NEW VIDEO | Here’s Why Industrials Are Up (And Why That May Be a Bearish Omen) | $XLI https://app.hedgeye.com/insights/46752-here-s-why-industrials-are-up-and-why-that-may-be-a-bearish-omen… via @KeithMcCullough #MARKETS

@Hedgeye

QUOTE OF THE DAY

Our greatest glory is not in never falling, but in rising every time we fall.

 -Confucius

STAT OF THE DAY

Early goalie-pulling has become a trend in the NHL, league-wide, 18 teams had an average pull time of more than 70 seconds remaining when trailing by a goal. Between 2007 and 2011, just a single team pulled its goalie with more than 70 seconds remaining in the game, on average.