CLIENT TALKING POINTS
USD
The USD was down for the 3rd straight week (post that terrible U.S. jobs report) giving the SPX short squeeze what it needed (up, on decelerating volume, to lower-highs) but the USD appears to be stabilizing this morning = Oil (-1.1%), Gold (-0.4%), and the “reflation” trade no likey.
NIKKEi
Japanese stocks no likey either…Down Dollar = Up Yen. After closing -0.8% last week, Japan didn’t believe the China “news” and sold off -0.9% into the close, taking the Nikkei -12% in the last 3 months (with USD -3.2% in the last 3 months).
CHINA
Look on the bright side of their storytelling, they didn’t stick a 7.0 this time and made-up “6.9%” GDP instead. LOL. Even the locals (who are paid to think a certain way) didn’t buy Chinese stocks on that – Shanghai Composite closes -0.14%.
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TOP LONG IDEAS
MCD
McDonald’s reports 3Q15 earnings Thursday, October 22nd before the market opens, with a conference call at 11:00am ET. We are expecting strong sequential improvement in performance globally. We look forward to giving you an update on the company’s performance next week, but this week we wanted to focus on the ‘Looming Crash in Beef.'
RH
Restoration Hardware opened its new Full Line Design Gallery at the Cherry Creek Shopping Center in Denver this week. This is another anchor property -- using 53,000 feet of the 90,000 left vacant by Saks at Cherry Creek.
RH is taking up the size of its stores from an average of 8,000 square feet to about 40,000+ for its new stores – and productivity rates on these new assets are headed higher. In the old stores, RH could only show 10% of its assortment, while in the newer format stores, the company is showcasing better than 75%. Consumers can’t (and don’t) buy what they don’t see.
TLT
The #SlowerForLonger theme from Hedgeye Macro has been consistent and straightforward. Our pivot in advance of the most recent jobs report to get long of gold and stay out of the way short-side on commodities turned out to be a good position.
Growth expectations have been correctly revised, but there’s still a good amount of room between Hedgeye estimates and consensus. We are expecting GDP in a range of 0.1%-1.5% for Q3 and another 1-handle in Q4. If that proves accurate, flatter goes the Treasury curve (TLT, EDV), wider goes high yield spreads (bad for JNK), and down goes the USD (GLD).
Asset Allocation
| CASH | 63% | US EQUITIES | 0% | |
| INTL EQUITIES | 0% | COMMODITIES | 6% | |
| FIXED INCOME | 31% | INTL CURRENCIES | 0% |
THREE FOR THE ROAD
TWEET OF THE DAY
*NEW*
The Big Fear: Jay Pelosky on the Key Market Risks Right Now https://app.hedgeye.com/insights/46957-the-big-fear-jay-pelosky-on-the-key-market-risks-right-now… via @jaypelosky @HedgeyeDJ
#markets #Fed
@Hedgeye
QUOTE OF THE DAY
Life is something like a trumpet. If you don't put anything in you don't get anything out.
W. C. Handy
STAT OF THE DAY
A record 20 hurricanes or typhoons have reached Category 4 or 5 strength in the Northern Hemisphere this year. The record was broken on Saturday when Koppu became the nineteenth storm to reach this intensity prior to slamming into the Philippines as a super typhoon.
